As 2011 draws to a close some of you are still stunned by the lack of recovery of our economy. Maybe you finally found a new job but it's for lower pay or less hours. You remain buried in debt. This might be a good time to consider getting rid of the debt that piled up during a long period of unemployment or during an extended illness or other calamity that put you behind.
There are limits to the amount of income you can earn and still completely discharge your debt in a chapter 7 bankruptcy so filing when your income is still relatively low may be your best chance to wipe out debt for a fresh start. If you wait until your income improves and still can't pay your debt you might be limited to a chapter 13 bankruptcy plan which will require you to make payments towards your debt for up to 5 years. By using a chapter 7 bankruptcy now to get rid of all your debt, you will be debt free and able to move on in your life rebuilding your credit to again plan for your future retirement and other future needs.
First you are going to want to collect any 2011 tax refunds due to you since unlike wages owed to you where 75% of the back wages are exempt, tax refunds don't get that same favorable treatment in bankruptcy and up to 100% of the tax refund due to you can be collected by a bankruptcy trustee and used to pay your creditors. With some simple advanced planning you can file for your refund as soon as you get your W-2s from your employers and your tax refund will be on it's way. Once you receive the refund you can use the funds to pay for your bankruptcy and spend any additional money on necessities for you and your family.
You can consult with an attorney now about whether bankruptcy is a good option for you. I offer a free preliminary phone consultation and more intensive office screening at a low cost. It is important to talk to an attorney before you spend your tax refund just to certain you don't inadvertently spend it in a way that the bankruptcy trustee will object to or that you buy some other asset that is not exempt and can be taken from you.
As a general rule you can spend your refund on reasonable expenses for food, clothing, shelter and medical expenses as well as attorney fees related to your bankruptcy. It is still a good idea to get legal advice first. Talking to a lawyer about bankruptcy does not commit you to filing a bankruptcy. It is only a preliminary step to explore solutions to your debt situation. In the course of talking to you I might be able to suggest other non-bankruptcy solutions.
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Attorney at Law