Paying Down Debt with Bankruptcy Can Stretch the Tax Refunds of Chicago Taxpayers
Wondering what to do with the tax refund you're getting this year? Maybe it's time to take a cue from the majority of Americans and pay down debt.
This year it's not about splurging on a flat-screen TV or a weekend getaway. More than 40 percent of consumers are going to use their checks from Uncle Sam to lower debt, according to an annual survey by the National Retail Federation. Some plan to sock away the refund in a savings account; other will use it to help pay the bills. Only 10 percent will take that dream vacation.
Now, you might be thinking using your refund responsibly sounds like all work and no play. But that's not true. Putting your windfall towards your debt can mean more play money in the future.
If you pay little more than the minimum on your debt each month, interest is likely eating away at your checkbook. That's because the minimum barely covers your interest obligation - so even though you're religiously paying the bills, your debt balance isn't budging. Why not use your tax refund to actually start lowering debt?
When you lower your burden, you'll see multiple benefits. You'll eliminate double-digit interest payments in the future. You'll likely raise your credit score by improving your balance to limit ratio. And you'll lower your stress levels - maybe more so than that vacation you could have taken with your refund.
By the way, since you'll be saving money after lowering debt, you'll actually be able to start saving up for that vacation - or any other splurges you have in mind.
But what if your bills have backed you into a corner and you need to use that refund ASAP to pay the mortgage or keep the electricity on? If times are too tough for you to pay more than the minimum, bankruptcy can help. Depending on your situation, bankruptcy can provide you with a more affordable payment plan - or a way to fully discharge your debts. Wondering if bankruptcy can help stretch your tax refund? Contact one of our Chicago bankruptcy attorneys for a free personal debt analysis, no strings attached.