Bankruptcy and Stimulus Money due to COVID-19 are not the same as bankruptcy and tax refunds. In the case of tax returns “Any return that results from income earned after filing for bankruptcy is yours to keep. A tax refund that’s based on income you earned before filing will be part of the bankruptcy estate no matter if you receive it before or after the filing date. Tax refunds go to the estate.”
Government Stimulus checks were sent out in order to counter the negative impact on the economy that resulted from COVID-19. It was within the government’s intention to completely and legally protect these checks for those filing bankruptcy. But in the rush of passing the Stimulus bill it was forgotten. After realizing their mistake the government switched to a passive aggressive stance that discourages trustees from pursuing people in bankruptcy who received stimulus money.
It’s not certain whether a Utah bankruptcy trustee will go after your stimulus money. However, with our experience we can give you an idea of what will happen and how to plan your bankruptcy case filing. Call my office for an initial consultation and we can help you strategize a plan to keep the most money you can. Bankruptcy and Stimulus Money are separate and should stay separate.
Some clients are concerned that a surge of income from the stimulus check will affect their qualifications for a Chapter 7 bankruptcy and force them into a Chapter 13 repayment plan. It has officially been determined that a stimulus check won’t be considered while calculating monthly income, and won’t be used in the calculation of disposable income that can be paid to creditors. This means receiving a stimulus payment won’t force an individual to repay a higher amount in bankruptcy than they would have if they hadn’t received it.
Even at this challenging time there are options to protect your financial future. We are here to help even with bankruptcy and stimulus money at stake. Call or Text us for your phone or Zoom consultation today. #utahbkguy