Should I pay off creditors with my tax refund or filing bankruptcy?

Unless you are able to pay off all of your unsecured creditors with your tax refund, you would be better off keeping the tax refund in your pocket and filing a bankruptcy to discharge your debts.

Many people think the bankruptcy trustee will take their tax refund if they file for bankruptcy. This is simply not true in most case.  In bankruptcy, a debtor is allowed to keep a certain amount of money.  The laws that allow this are called exemptions.  The best option for someone considering bankruptcy is to hold on to their tax refund and seek a consultation with an experienced bankruptcy attorney before they make any decision about paying anyone.  The attorney will be able to tell you if any part of your refund is in jeopardy.  And, if any part of your tax refund is at risk of being taken, a smart attorney will be able to tell you things you can do to protect it within the bounds of the law.

The worst thing a person can do is to repay "insiders" with their tax refund.  An "insider" is considered a friend of family member.  Again, the best option is to hold on to your tax refund and speak with a bankruptcy attorney about how to protect everything.  You do not have to lose your tax refund if you just follow the attorney's advice.

The Law Office of Seymour & Associates, P.C.

The legal info provided on this website should not be construed to be any type of formal legal advice, nor the formation of an attorney-client relationship. Any case results set forth here were dependent on the specific facts of that case and the results will differ from case to case.