As Mr. Taieb has written before, you should not automatically use your tax refund to file bankruptcy. If you have no other debt and you need to catch up on a secured debt such as a mortgage or car loan, then use the money to pay the debt.
However, if the money from the tax refund only pays a part of the debt, then you are throwing your money out since it will not resolve your financial issues.
Mr. Taieb has seen so many clients who are robbing from Peter to pay Paul, pay a large sum to stop a utility shut off to then find that several other creditors are pressing them.
You do not want to be in that situation. Thus, TAIEBLAW’S rule of thumb is that you should not use your tax refund to pay creditors unless it satisfies all your credit card debts or arrears of secured debts.
Using your tax refund to file bankruptcy will give you an immediate breathing spell since it creates any automatic stay which stops all creditor actions against you such as harassment, law suits, garnishments, foreclosures, repossessions or any other action that a creditor takes against you.
You want to get the stay in effect to protect you against creditors. Therefore, if you are overwhelmed with debt, behind on secured debts, do not use your tax refund to make partial payments which will not resolve your debt problems, use your tax refund to file a bankruptcy to resolve your debt problems for good instead of paying Peter by robbing Paul.
If you have any questions concerning who gets paid or any other questions, feel free to contact me at 856-235-4994.
Steven N. Taieb, Esq. is here to help you and is a South Jersey Bankruptcy Attorney who has helped over 7000 people with their financial problems for the past 32 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.