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Keep Tax Refund Through Ohio Bankruptcy Filing



Sheppard Law is an Ohio Debt & Federal Tax Relief Agency


If you considering filing for bankruptcy in Columbus, Ohio, there are several concerns that should be addressed as to when the best time to file bankruptcy is, and how to handle income tax filing and refunds through a bankruptcy. One very common question that we are asked is "can I keep my income tax refund when I file for bankruptcy?"  The answer is yes, if handled appropriately you may be able to keep some or all of your income tax refund.


One of the distinct advantages of having Sheppard Law Offices handle your bankruptcy filing is that in addition to handling chapter 7 and chapter 13 bankruptcies, Ken Sheppard, Jr. is a federal tax lawyer, and the office also has an in house income tax preparation service. Providing both Bankruptcy and Tax Services, provides our office with a clear understanding of the IRS code and taxation issues that often go along with the bankruptcy process.


If you can keep your refund or not, and how much of it you can keep depends on several factors, including  whether you are filing for Chapter 7 or Ch 13 Bankruptcy.


Use of Income Tax Refunds to Pay to File Bankruptcy in Ohio

You are permitted to use your federal and/or state income tax refunds to pay for your Ohio bankruptcy attorney fees and court costs.


Income Tax Refunds and Chapter 7 Bankruptcy in Ohio

When filing for Chapter 7 Bankruptcy in Columbus, Ohio there are several factors that will determine how much of your refund you may be able to keep. The time of the Ohio chapter 7 bankruptcy filing, when the refund is received, and available of exemptions are all taken into consideration.


Income tax refunds that are received before filing for chapter 7 bankruptcy in Ohio and refunds that are due for the portion of the year that has passed before filing for chapter 7 bankruptcy in Ohio are considered part of the bankruptcy estate and may be taken by the bankruptcy trustee to pay unsecured creditors. As part of your free initial consultation, we will discuss if delaying filing for bankruptcy may provide any benefit to you. If delaying is of benefit, the Sheppard Law bankruptcy attorney can share with you how you may utilize your refund to purchase exempt assets to have the income tax refund protected from the bankruptcy estate, as well as the maximum level that you should spend on each of these exempt assets.

Ohio Exemptions to Protect Your Income Tax Refund From Bankruptcy

In Ohio there are several exemptions which may be applied to protect a portion or all of your income tax refund from being taken in a chapter 7 bankruptcy, even if the refund is included as part of your bankruptcy estate. Examples of exemptions that may be applied to your income tax refund when filing for chapter 7 bankruptcy in Ohio include:

Ohio Cash Exemption

Ohio Wildcard Exemption

Ohio Exemption for the Earned Income Tax Credit

Ohio Exemption for the Additional Child Tax Credit


If you have already received your refund check or are preparing to file your income taxes, we strongly suggest that you consult with a Sheppard Law bankruptcy attorney BEFORE depositing an income tax refund check or scheduling a direct deposit, as the traceability of the spending refund monies can impact available exemptions. For this reason, it is NOT a good idea to deposit (co-mingle) your refund in your bank account with other funds.


Income Tax Refunds and Chapter 13 Bankruptcy in Ohio

When filing for a Chapter 13 Bankruptcy debt-reorganization plan, all disposable income is required to be paid into the plan, The trustee will usually consider income tax refunds as disposable income, and therefore the refund will be included in the bankruptcy.


There are however ways in which your income tax refund may be excused from the Ohio chapter 13 bankruptcy repayment plan. The plan may be written to include language that excludes your income tax refund, however in order to do this we must show a compelling reason to the trustee to accept such language. Another alternative to keep your refund from the chapter 13 bankruptcy debt repayment plan is to file a plan modification.


Filing a Plan Modification to Keep Income Tax Refund

A plan modification must be filed each year for the income tax refund that you would like to excuse from the chapter 13 bankruptcy repayment plan. While filing the modification does not automatically allow you to keep your income tax refund from being taken in the bankruptcy, the court will accept reasons that it considers to be unexpected and necessary. Some examples which may be accepted by the bankruptcy court include: auto repairs, appliance repair or replacement, medical, dental, and funeral expenses.


As each individual and family face different financial situations, at Sheppard Law Offices we work with our clients to determine what means are available, and what best alternative are to keeping an income tax refund, and working to your best possible overall financial outcome. This includes advising our clients as to the best time to file their bankruptcy, and if filing sooner or delaying filing bankruptcy will provide the most benefit.


Speak with a Columbus, Ohio Bankruptcy lawyer  today at (614) 523-3106 for a FREE initial debt relief consultation

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Sheppard Law Offices - Columbus

Sheppard Law Offices

The Columbus, Ohio bankruptcy debt relief and taxation law office of Sheppard Law Offices, LPA is conveniently located just inside I-270 off of Cleveland Ave. Our offices provide a short drive from throughout Central Ohio including counties of Franklin, Delaware, Knox, Marion, Licking, & Fairfield. We regularly serve  Debt  & Tax needs of clients from  Columbus, Westerville, Bexley, Dublin, Sunbury, Delaware, Fredericktown, Johnstown, Centerberg, New Albany, Gahanna, Pickerington, Grandview, Upper Arlington, Clintonville, Groveport, Pickerington, Pataskala, Reynoldsburg, Groveport, Lewis Center, Worthington, Granville, the Short North, Hilliard, Plain City, Grove City, Newark, Mt. Vernon, Canal Winchester, and Lancaster.

Columbus Ohio Office

2600 Tiller Lane, Suite A

Columbus, Ohio 43231

Telephone: (614) 523-3106

Newark, Ohio Office

843 N. 21st Street, Suite 108

Newark, Ohio 43055

Telephone: (740) 345-7138

Akron-Canton Office

Belden Village Tower, 200

Canton, Ohio 44718

Telephone: (330) 409-2876

Mt. Vernon, Ohio Office

11 West Gambier Street

Mt. Vernon, Ohio 43050

Telephone: (740) 392-0404

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We are a debt relief agency. We help people file for protection under the U.S. Bankruptcy Code.