As Mr. Taieb has advised in the past, you should never waste your tax refund on credit cards unless it satisfies them totally and makes you debt free.
Even though you are attempting to pay back your debt, the creditors will still go after you if you have not satisfied their debt in full.
Also, if you try to make a lump sum payment to satisfy a debt, this will result in tax implications since you will get a 1099 from the creditor if your debt was reduced by over $600.
What most people do not understand is that bankruptcy takes a universal approach and deals with ALL your debt- not just one creditor at a time.
Also, many of Mr. Taieb’s clients can take a large exemption for their tax refund under 11 USC 522(d)(5) which would protect that money from creditors depending on their asset picture while the bankruptcy stay will get the pursuing creditor off their back.
The only time you would forfeit your tax refund is if you file a chapter 7 and have substantial assets or property. In a case like that where you have used all your exemptions or have non-exempt property, you are usually filing a chapter 13 anyway which would protect your assets, including a tax refund.
Thus, if you are overwhelmed with debt and cannot satisfy all your debt with your tax refund, then you should contact TAIEBLAW to get the bankruptcy stay in effect.
If you have any questions concerning this matter or any other matter, contact TAIEBLAW at 856-235-4994 or visit our website at TAIEBLAW.COM, and schedule a FREE initial consultation.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 34 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.