Everyone knows this is a busy season for accounting professionals. Indiana bankruptcy lawyers tend to get involved with tax season in a different way: Around this time each year, all the good bankruptcy attorneys in Indiana who work in the five Zuckerberg bankruptcy law offices start getting questions about tax refunds.
Why would anyone ask a bankruptcy attorney about tax refunds? Because the only way many debtors think they can afford to pay a lawyer for bankruptcy in Indiana – is with tax refund money. The two questions that the Richmond, Anderson, Bloomington, and Columbus bankruptcy lawyers are asked most often are:
- Should I get my refund before I file bankruptcy?
- Will the bankruptcy court take away my refund money to pay creditors?
I’ve got more than 26 years of offering Indiana bankruptcy help under my belt, and my answers to those two questions haven’t really changed:
a) It’s best to file your taxes as early as you can. (This year the IRS announced that it’s not opening the tax filing season until January 30th).
b) If, in fact, you’ve received your tax refund before you file personal bankruptcy in Indiana, and have not spent the money before you file, then yes, the bankruptcy court may use that money towards paying your debts.
There’s something else about this time of year – it’s hunting season for all kinds of scams and “deals”. Everybody seems to be after those tax refund dollars – their own, and sometimes, yours. And so, every year around this time, I remind Bankruptcy in Indiana readers not to fall into the “rapid refund” trap.
Rapid refunds are really refund anticipation LOANS offered by some tax preparation firms and by banks. In order to receive their money early, consumers are charged a loan fee, and, as United Way of Connecticut properly points out, an interest rate on the loan ranging from 40%-700% (no, that’s not a “typo”).
While in some areas, “rapid” may be considered a positive “rapid refund loans”, even to pay bankruptcy filing fees, are definitely not a good way to launch your fresh financial start!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg