Parents will soon receive their first payments under the Child Tax Credit. Congress and the Biden Administration voted to provide parents with incomes below a certain threshold of $3,600 in 2021. You can find out how much money you’ll receive or how you can change the bank account to which it will be deposited by visiting the website.

The 2021 Child Tax Credit Is Protected in Bankruptcy

Parents know that children are expensive, and they will keep this money for their families. How does bankruptcy affect the payment? Congress made sure to protect this money from bankruptcy. You will still receive the special 2020 Child Tax Credit even if you declare bankruptcy. This is allowed by 11 U.S.C. Section 541(b). This law was specifically created for the Coronavirus Pandemic.

How Do Tax Credits and Refunds Work in Bankruptcy?

You should also consult an attorney to determine which tax refunds will be protected by bankruptcy. People who don’t own a home can protect tax refunds owed to them by the government. If you own a home, the laws regarding tax refunds are less generous. The government will not protect any refunds that it owes to you on the date of filing. The Chapter 7 bankruptcy only counts the refunds that you owe on the day the bankruptcy was filed. It does not follow you to future tax refunds.

This article was written by Alla Tenina. Alla is the best bankruptcy attorney in Los Angeles California, and the founder of Tenina Law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user, or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.

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