Every year Americans receive thousands of dollars in refunds from the IRS. Unfortunately, most people find that their refund quickly disappears on things like credit cards with crazy interest rates, or, on urgent expenses like car or home repairs that were put off for far too long. In either case, using your refund on these things buys you little time, as you wind up with little to no savings, again waiting for next year’s refund. You need to break the cycle. Here are 3 reasons why spending your refund on filing bankruptcy will break the cycle and give you a fresh start.
1.Reason #1: There is an immediate impact.
From the moment you file bankruptcy, you notice the difference. The barrage of collection calls and collection notices will stop. Most of your debts, including credit cards, past due utility bills, and medical debts are completely erased. Using your tax refund to “pay down” these debts would be a temporary fix. You’d essentially be burning money and only slowing down the inevitable. Bankruptcy, on the other hand, is a permanent fix. Exactly what it’s designed to be… a fresh start. You will finally be able to breathe again and to move on with your life.
2.Reason #2: Your credit score will thank you. And sooner than you think.
My clients are constantly telling me “I can’t believe that my credit already improved. Is this a mistake?” No, it’s not a mistake. If you take a moment to really think about it, this makes sense. Right now, you have a lot of debts. Credit cards, medical bills, utility bills, car note, etc. Even making minimum payments on these debts every month can hurt your credit. Why? Because it shows the credit agencies that you are barely scraping by, meaning you are a risk to them. This reduces your credit score. Making partial payments or missing payments is obviously even worse. Every single month that you have a missed payment, a partially missed payment, or a minimum payment, is another month that your credit score takes a hit. It’s a slow death, and it will go on for years. Even if it’s only a few points each month, your credit score continues to go down Each. And. Every. Month.
Bankruptcy puts a stop to this. Yes, your credit score will take a hard hit the day you file bankruptcy. It has to. But Bankruptcy only reduces your credit score that one single time, not every single month like the minimum, partial, or missed payments do. The Bankruptcy can also eliminate most of your other debts in one fell swoop. Gone for good. This means that you no longer have a missed, partial, or minimum payment hurting you every single month!
This means that your credit score can start to go UP, instead of down, every month. How fast that happens is up to you. There are steps you can take to accelerate the process, like taking out a secured credit card and making timely payments on it every month. Essentially, Bankruptcy gets rid of all of the negative accounts that are dragging your score down, and since the Bankruptcy will now be the only negative item on your account, the more (1) time that passes and the (2) more positive things you can put on your account after your bankruptcy, the more that your credit score will go up. The moral of the story? Bankruptcy can actually allow you to improve your credit score.
3.Reason #3: You can finally build a savings account and have financial flexibility.
How much are you spending on those minimum, partial, or missed payments every month? $100? $200? $300? Well all of that money can now begin to go into your savings account every month. All of it. Bankruptcy is not intended to punish you. It is intended to get rid of the punishment of overwhelming debt and give you a fresh start. You are allowed to have disposable income after a bankruptcy, and you are allowed to keep every penny of it.
When was the last time you had a nice dinner? Bought a new winter jacket? Took your kids to the movies? If you are working hard every day but it just doesn’t get any easier, then do yourself a favor, give Robson & Lopez LLC a call to receive a free and personalized consultation. Your tax refund can provide you a lot more than just temporary relief. Use it wisely and you can finally get a fresh start on your finances.
The consultation is free. What’s the harm? Call us today.
The attorneys at Robson & Lopez LLC focus on consumer protection law and property law. The posts on this page are designed to be generally educational only, and not intended to be legal advice. We cannot guarantee that issues written about here apply to your personal situation. If you would like to talk to an attorney about the specifics of your case, please call us for a free consultation: