As a Memphis bankruptcy lawyer, I always remind people that using your tax refund to file for bankruptcy can be one of the best ways to take control of your debt. But understanding how bankruptcy affects your taxes and vice versa can be a bit confusing. Many people hesitate to file their taxes if they’re thinking about bankruptcy, or hesitate to file for bankruptcy during tax season.

Read below for answers to the most common questions I get about taxes and bankruptcy, and be sure to get those taxes in on time.

FAQs about bankruptcy and your taxes:

Do I have to file my taxes to file for bankruptcy?

Yes, you are required to file your taxes — and the bankruptcy court may request proof.

Do I have to file my taxes on time to file for bankruptcy?

If you’re filing a Chapter 7 bankruptcy (which is the type of bankruptcy that allows you to get rid of unsecured debts like taxes and credit card bills without paying them back), you need to have filed on time in order for the debt to be discharged.

But if you don’t get them in on time, a Chapter 13 bankruptcy (which combines your debts into affordable monthly payments) may be an option.

If I filed for bankruptcy, do I have to do anything different on my tax return?

No. Most often, filing your taxes after a bankruptcy is exactly the same process as it would be otherwise.

Can I discharge my tax debt in a bankruptcy?

Yes. A Chapter 7 bankruptcy offers full discharge of tax debts — meaning they are completely wiped out and you don’t have to pay them back. However, you need to have filed on time, and the tax debt must be three years old. 

Why would I want to use my tax refund to file for bankruptcy?

I love this question. As a Memphis bankruptcy lawyer, I believe there’s no better use of your tax refund than buying full freedom from debt. Tax season is a wonderful time to clear your slate and get the peace of mind you deserve, which is precisely what bankruptcy offers. Think about it: once you get out of debt, you no longer have to pay interest fees or worry about creditors. This has long-term benefits for you and your family’s financial health and well-being. In this way, using your tax return to file for bankruptcy can give you significantly more value than what’s written on the check.

How do I use my tax refund to file for bankruptcy?

It’s incredibly easy. Once your refund comes in, you can contact us online or give us a call at 901-327-2100 for a FREE consultation, no strings attached. We’ll look at your specific situation and talk with you about your goals. After we speak, you will walk away with a clear idea of what the process will look like and what it will cost.

If you’re considering bankruptcy this tax season, contact us for a FREE consultation.

I hope this has answered some of your tax and bankruptcy questions. If you still have questions or are considering using your tax refund to file for bankruptcy, contact us today. We are ready to help get you on the road to a debt-free life.