It is a myth that your tax refund is not considered an asset in bankruptcy until you file your tax return.  Chapter 7 Bankruptcy Trustee can take your tax refund that has accrued up to the date of filing your bankruptcy petition if your tax refund is an nonexempt asset.  Nonexempt assets are assets that is not protected under the exemption statutes.  Tax refund is treated as disposable income in Chapter 13 Bankruptcy and is supposed to be paid into the plan to your unsecured creditors when received during the 3 to 5 year plan duration.

Pre-bankruptcy planning is important here.  You should reduce your tax withholding to the amount you owe.  More importantly, you do not have to struggle without those funds for a year.  Uncle Sam is not paying you interest in holding your money.  A better idea is to keep the funds in an emergency savings account so that you do not have to resort to a high-interest loan.  Or keep the funds in a retirement account that earns interests.

You should consult a tax preparer to determine how much tax you should withhold for the Internal Revenue Services and Franchise Tax Board as well as general tax planning.  The IRS and FTB have branch offices in Sacramento California and throughout Northern and Central California if you have question about your tax debt.  For bankruptcy advice, call Muoi Chea Bankruptcy Attorney to schedule a consultation.  Bankruptcy Attorney Offices are located in Sacramento, Stockton, and Fairfield, California to provide debt relief and asset protection for consumers and small businesses throughout Northern and Central California.