Are you living paycheck to paycheck? Planning to file bankruptcy but wondering how you’ll be able to pay for it? A tax refund can be the opportunity to get it done. Bankruptcy law gives you the right to have debts forgiven if you are in a financial hardship. Between the high cost of housing and growing income inequality, financial hardship is common in the Bay Area. Most people recognize when they are experiencing a financial hardship, but do not know the law regarding tax refunds and bankruptcy. Caution is warranted. There are two general prohibitions regarding use of money when planning to file for bankruptcy. A person is not allowed to: (1) repay loans to family members and friends if they are not paying other creditors at least the monthly minimum payments when due and (2) give large (over $500) gifts with the exception of regular giving to a church or charity. Conversely, a person is allowed to pay living expenses such as: monthly rent or mortgage(s), car payments, utilities, and usual household expenses. Of course, bankruptcy is not free and the law allows a person to pay for bankruptcy with a tax refund or other money.
At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.
Reference: 11 U.S.C. 547 and 548