How will bankruptcy reform affect tax refunds? Under the old law, a person automatically loses his/her tax refund in bankruptcy - for the prior year(s), and the period up to the date of bankruptcy in the year of bankruptcy.
Under the new law that took effect on July 7, 2008, section 67(1)(c) of the Bankruptcy & Insolvency Act was changed so that a bankrupt would lose their tax refund in bankruptcy for the entire year of bankruptcy.
Thus if you were to go bankrupt on June 1, 2009, instead of just losing your tax refund for the period from January 1 to June 1, 2009, you will now lose your tax refund for all of 2009.
We recommend that you contact our Ontario bankruptcy offices for more information on bankruptcy reform and tax refunds in bankruptcy.
Our bankruptcy offices in Ontario
Contact a bankruptcy trustee
About bankruptcy trustees at Hoyes Michalos