It’s tax season, so that makes it a good time to answer this frequently asked question: SHOULD I FILE MY TAX RETURNS BEFORE OR AFTER I FILE BANKRUPTCY?
It is probably better to file tax returns before you file bankruptcy. This is likely true whether you have a refund coming or whether you owe taxes.
If you are entitled to a refund, you will probably want to receive it and use those refund monies before you file. This is not always true. If your refund is small enough to be covered by the Federal Wild Care Exemption, it may not make a difference.
But tax refunds are not exempt under Wisconsin exemptions. Therefore, if you are entitled to a refund, you probably will want to receive it and use those funds before you file.
There could be an exception, if you want the refund to be used by the bankruptcy trustee to pay some type of non-dischargeable debt.
If you owe taxes, you will want to get your returns filed so that any assets in the case can be applied to pay your otherwise non-dischargeable tax debt.
If you file under Chapter 7 it is likely that the bankruptcy trustee will require that you file your returns. If you file under a Chapter 13 it is a certainty.
