No. Private creditors cannot seize a federal tax refund, even if they have a judgment against you. The only creditors who can go after your tax refund are the IRS, student loans, certain other debts owed to the government, and child support. The same is true of a state tax refund, with the exception that hospitals can seize your state tax refund directly.

Once the money has gone into your bank account, it is fair game for judgment creditors to levy upon it, and similarly, if you owe money to the bank where you deposit your tax refund, and are not current on your payments with them, they can seize the money by setting it off against your debt to them.

This time of year, many people find that their tax refund is insufficient to put a sizable dent into their debt load, yet it makes them solvent enough to hire a bankruptcy attorney to discharge their debts. There are lots of do’s and don’ts about what you should and should not do with a tax refund prior to filing a bankruptcy. Please call me if you would like to discuss this further.

A blog post from a couple of years ago also addresses this topic.