If you’re facing insurmountable debt and looking to regain financial freedom, declaring personal bankruptcy may be the solution. However, there are many aspects to bankruptcy that require careful consideration before filing. Determine whether to file before or after submitting your tax return, as this can affect bankruptcy eligibility and determine whether or not you get to keep any tax refund you’re owed. Here’s what you need to know to plan the timing properly.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy allows for the complete discharge of unsecured debt. When you file, all nonexempt assets will become the property of the bankruptcy estate and can be distributed among creditors as a way to pay back some of what you owe. This includes a tax refund. However, in Georgia, you may use the wildcard exemption to protect thousands of dollars of your property. If you decide to file taxes before your personal bankruptcy, spend your refund before it can be factored into your assets. To do this without repercussion, use it for necessary expenses rather than luxury purchases or to pay off a friend or family member.

Chapter 13 Bankruptcy

Whether you file a Chapter 7 or Chapter 13 bankruptcy, you must be up to date on all previous years’ tax returns before filing. For Chapter 13, you must be able to show the bankruptcy trustee your returns for the last four years. Once you file, the debts will be reorganized into a repayment plan that allows to you make affordable payments to creditors over the next three to five years. In Chapter 13 personal bankruptcy, assets are safe from liquidation, but any nonexempt funds you receive before a payment plan is established could increase the monthly amount you’re responsible for paying.

Filing bankruptcy at the right time ensures you reap all potential benefits. If you’re struggling to meet financial obligations, contact Brian R. Cahn & Associates, LLC, to find out if personal bankruptcy is the best choice for your situation. Backed by more than 25 years of experience, Brian Cahn has helped countless residents throughout the Whitfield, Murray, Gordon, Bartow, and Paulding counties of Northwest Georgia successfully achieve debt relief. The firm will guide and advise you on strategies to maintain control over your finances to avoid future problems. Call (770) 382-8900 to set up a consultation or visit their website to learn more about filing options.