For some residents of Pennsylvania, a tax return is a way to treat themselves, pay off a few debts or splurge on a trip. For many, though, it’s just enough to take the first step out from under crushing debt, by giving them the financial means to file for personal bankruptcy. Sometimes, people use the refund to get caught up on past-due bills, but many individuals are so far behind that the best — and possibly only — option available is filing for Chapter 7 bankruptcy.
Indeed, a 2015 report showed that almost half of all Americans would be unable to cover unexpected emergency expenses over $400. When the financial outlook is dire, more and more people turn to Chapter 7 bankruptcy as a way out of struggling with overwhelming debt. Many debts, like credit card debt and many medical bills, will be discharged under Chapter 7 bankruptcy.
While some debts won’t be wiped clean — such as most student loans and taxes — an experienced bankruptcy attorney can offer guidance. Personal bankruptcy can be a great option if an individual’s or family’s debts are higher than 50 percent of total annual income. Likewise, if paying off the mounting debts seems impossible within the next five years or the debts are interfering with other important aspects of life — such as saving for retirement — bankruptcy may be something to consider.
For Pennsylvania families struggling with insurmountable debt, this year’s tax refund might be a ticket to a brighter financial future. Using a tax refund to pay for filing Chapter 7 bankruptcy could mean a discharge of debts and a fresh start. An attorney with experience in handling personal bankruptcy claims can offer invaluable guidance throughout to help ensure the sometimes-complex process is as smooth and hassle-free as possible.
Source: nerdwallet.com, “When a Tax Refund Means Bankruptcy“, Sean Pyles, April 13, 2017