The short answer is “Yes.” Hiring an attorney to represent you and file a bankruptcy on your behalf is a service that you may pay for from your tax refund. Tax refund season is a good time to consider and review your bankruptcy options. Using your tax refund to pay for a bankruptcy can allow you to discharge and eliminate most debts.
However, there is much more to consider. The question that often arises during this time of the year is whether you can keep your tax refund in the bank or in cash and then file bankruptcy or whether you can file bankruptcy and then keep your tax refund if you have not yet received it. Whether received or not your tax refund is considered an asset. All assets, including the right to receive money owed to you, must be disclosed as part of a bankruptcy filing. Determining if you can keep your tax refund after you receive it may be an important part of deciding if bankruptcy is an option for you. Some portion of a tax refund not yet received may be “exempt” which means you may be able to keep it once received. However, depending on the amount of the refund, very little money in the bank or cash on hand can be protected in a bankruptcy. Therefore, the amount of the refund, the timing when the refund is received, and the timing of filing bankruptcy can be a very important factors to consider if you are expecting to receive a large refund and considering bankruptcy. There may be strategies that can be employed to your benefit. Having a discussion with an experienced bankruptcy attorney can potentially be very beneficial before you file your tax return and receive your refund.
Another reason it can be very beneficial to talk with an attorney about the options you may have before you receive your tax refund is that many people want to do some very specific things when they receive their refund. Often people may be planning to use a tax refund to pay back certain debts, pay back family or friends they owe money to or purchase things they need. Some of these uses of a tax refund can potentially create significant problems in a bankruptcy filing. Some tax preparation services offer an “advance” which is typically a short-term loan at a very high interest rate. This may not be in your best interests. Once again, a discussion with an experienced bankruptcy attorney can be invaluable.
Many people use their tax refunds to pay for bankruptcy. This may be a good option for you and your family. At Kinkade & Associates we would welcome the opportunity to meet with you and talk with you about your options for debt relief and the appropriate strategy regarding your anticipated tax refund. Now is the time for these discussions even though you have not yet filed taxes for 2020. Please contact us through our web site or give us a call to schedule your free no obligation consultation with a local attorney.
Please contact us today to schedule your appointment. We would welcome the opportunity to assist you in beginning the process of rebuilding your financial life.
Thank you for considering Kinkade and Associates.
Kinkade and Associates, helping families rebuild their financial life.