Sunday, February 22, 2015

Why now may the best time to file bankruptcy

   Many people wonder if there is one time of year that is more advantageous to file bankruptcy.  When you decide to file a bankruptcy, one of the potential assets that the trustee will look at is your expected income tax refund.  The trustee will look at the month that you file and determine any percentage of non-exempt portion that belongs to the estate.
(This means they can take the money.)  The exempt portion of your tax refund is any earned income tax credit you may be entitled to.  (This means they can not take earned income tax credit.)  They can however look at any portion of your refund that is child tax credit, education credit or withholding.

     When planning the best time to file, there are a couple of considerations.  The most important of course is whether or not you are being garnished.  If you are, then the analysis must include whether you will lose more in garnishment than potential tax refund.  If the answer is yes, then you file immediately in order to stop the garnishment.

     Another important consideration is whether you are trying to stop a foreclosure or repossession. These are not usually issues that you can do a whole lot of waiting, as there is often a strict deadline involved.

     If you can wait and time your filing, try to file after you have received your tax refunds and have spent them.  They can not be sitting in the bank for a rainy day. Many of my clients will use their tax refund in order to pay they attorney fees and filing fees associated with filing their bankruptcy.

     It is important to consult with an attorney regarding what you are allowed to spend your tax refund money on and not run into any trouble with the bankruptcy court.  For example, do not go buy a car or a big screen television.  You could very possibly lose it as a non-exempt asset.

     Contact our office for a free initial consultation.  We will be happy to provide you with guidance on proper planning for a smooth and stress free filing that still ensures you are in compliance with the bankruptcy rules.

     Remember, we are a debt relief agency.  We help people file for relief under the U.S. Bankruptcy Code.

Angela Boeck-Giscombe P.C. 
A Law Firm of Straight Talk, Straight Answers

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