As 2016 comes to an end, the 2017 Tax Season will begin. Federal law requires that all employers provide their employees with their W2s no later than January 31st, so that federal income taxes may be filed by April 18th. Bankrate predicted in 2015 that thirty percent of the public who would receive a 2014 tax refund would use that refund to assist them with lowering their debt and that many of this thirty percent would use their tax refund to file a Chapter 7 or Chapter 13 Bankruptcy. This statistic has remained unchanged for many years.
The most advantageous benefit to using your tax return to help you file a Chapter 7 or Chapter 13 Bankruptcy is that using your tax refund to fund your bankruptcy allows you to use your refund in an essential and reasonable manner. When you use your tax refund in an essential and reasonable manner such as filing bankruptcy, then your tax refund most likely will be protected from your creditors and well spent.
While I would like to say it is better to file bankruptcy before the end of the year so that you can have a fresh financial start in 2017, there are two big things to keep in mind. If you do not use your tax refund in a necessary and reasonable manner, it will be lost to your bankruptcy estate. Luckily, attorney fees are considered a reasonable and necessary expense. Therefore, by waiting until you receive your tax refund to file bankruptcy and using that tax refund to pay for your bankruptcy, you will guarantee that you will not lose your tax refund, and that it will be used for your benefit.
The other great advantage to waiting to file bankruptcy until you receive your tax refund is the majority of people find it almost impossible to come up with the money necessary to file bankruptcy. Your tax refund allows you to pay for your bankruptcy all at once.
If your tax refund is more than your attorney fees and the cost of filing bankruptcy, then you can protect the rest of it if you have available exemptions, or you can spend the rest on necessities. Necessities can include food, your mortgage payment, clothing, medical expenses, etc. Just make sure not to spend your tax refund on any luxury items.
When you should file your bankruptcy depends on a lot more than just simply receiving your tax refund. Timing is one of the leading reasons why it is so imperative to speak with an experienced Jacksonville Bankruptcy Attorney who can make it easier for you to figure out if bankruptcy is the best option for you and when you should file your bankruptcy. Contact the Law Office of David M. Goldman, PLLC today to speak with an attorney.