Using Your Tax Refund Before Filing Bankruptcy in Pickerington and Lancaster

For many families in Pickerington, Lancaster, and throughout Fairfield County, the tax refund is the largest single deposit they receive all year. If you are considering filing Chapter 7 or Chapter 13 bankruptcy in central Ohio, how and when you use your tax refund can significantly impact your case.

Under bankruptcy law, a tax refund is generally considered an asset. If you file bankruptcy while you are entitled to receive a refund, the bankruptcy trustee may be able to claim some or all of it for your creditors. This often surprises people who thought their refund was “protected.” The key factor is timing and how the funds are handled before filing.

In many cases, with proper planning, your tax refund can be used for reasonable and necessary expenses before your bankruptcy is filed. Common approved uses include rent, mortgage payments, utilities, food, vehicle repairs, medical expenses, and even bankruptcy attorney fees. These expenses improve your financial stability and are typically viewed as appropriate by the court.

What can create problems is using a refund on luxury items, large gifts to friends or family, or paying back loans to relatives right before filing. These transactions can trigger trustee scrutiny, demands for repayment, or even allegations of fraud. That is why it is critical to speak with a local bankruptcy attorney before spending your refund.

For residents of Pickerington, Lancaster, and surrounding central Ohio communities, tax-season bankruptcy planning can often mean the difference between protecting your money and losing it to the trustee. Proper strategy ensures that your refund works for your household—not against it.

If you anticipate a sizable refund and are struggling with credit cards, medical bills, payday loans, or past-due mortgage payments, now is the time to get guidance. Strategic timing allows you to enter bankruptcy in the strongest possible financial position.

For more information, call the Law Office of David A. Bhaerman at 614-834-7110 or schedule a Free Consultation Online.