Anyone know about tax refund filed in bankruptcy?

If you go for chapter 7 bankruptcy, the tax returns are discharged and if you consider chapter 13, a repayment plan will be fixed for you. Under the new bankruptcy laws, not all tax debts are dischargeable.

The tax debts are dischargeable in chapter 7 and 13 bankruptcies, provided they meet the following criteria. The bankruptcy petitioner will evaluate your tax debts under the following conditions.

• The due date of filing tax return should be at least somewhere more than three years.
  
  
• You should have filed the tax return at least two years ago.
  
  
• The date of assessment should be 240 days old.
  
  
• Your tax return should be no way fraudulent
  
  
• And you should not be proven guilty of tax evasion.
  

The RAL generally uses the tax refund itself as security for the loan (just like a car-note uses the car as collateral).

Your sister can include the RAL in a bankruptcy filing; however she shouldn't expect to get her refund back. Kind of like "you don't get a free car by going bankrupt on your carnote" ... the tax preparer has a security interest in the refund and will be able to keep it if she doesn't reaffirm.

Also keep in mind that you cannot discharge a debt incurred within 90 days of the bankruptcy filing.