Is bankruptcy a wise investment of your stimulus check? It depends…
The pandemic has caused high unemployment and underemployment. If you, like many Americans, have had to utilize credit cards or take on other debt, you likely use everything you have just to make minimum payments. You may feel like you are constantly spinning your wheels trying to catch up. The coming stimulus check—which is up to $1,400 per person—may be what you need to wipe your slate clean and start over.
When Am I Going to Get My Stimulus Check?
According to news reports, many people already have money in the bank. However, the IRS has indicated that it will deposit money by March 17, 2021 for most of the U.S. Others may have to wait a few weeks as money trickles through the busy IRS system or for a paper check.
You can check on the status of your stimulus check on the IRS.gov website called Get My Payment.
This stimulus, also called the American Rescue Plan Act of 2021, is the nation’s third.
Should I Use My Stimulus Check To Pay off Debt?
It depends. If you have a small amount of debt, it may be a good idea. However, if you have debt that the stimulus payment or other resources will barely make a dent in, and if you have a history of not being able to pay your debt down, it may not be in your best interest to use your entire stimulus check to pay off only a part of your debt. If it only pays a small portion of what you owe, you will be left with the rest to manage and no money remaining.
However, if you use your stimulus check to file for bankruptcy, you could potentially wipe out much of your debt in one fell swoop. By discharging all or part of your debt in bankruptcy, you could free up income and other financial resources for rent, savings, ongoing medical care, and other needs or wants.
Attorney Holly Shattuck has worked with many people facing significant debt, and she can advise you as to whether bankruptcy may be beneficial to you based on your individual circumstances. She will consult with you and evaluate all of your debt. Whether bankruptcy is a good option for you or not, you will be satisfied knowing you have taken steps to evaluate all of your options before you decide what to do with your stimulus payment.
How Much Does Bankruptcy Cost?
It probably doesn’t cost as much as you think to get legal help and file bankruptcy. The federal filing fee for a Chapter 7 bankruptcy is $338. However, you may qualify to pay it in installments or get a hardship fee waiver. A Chapter 13 filing fee is $313.
There are other associated costs for credit counseling, attorney fees, and miscellaneous costs like printing forms and mailing. In general, the total base cost for a Chapter 7 bankruptcy falls within the $1,500 to $2,500 range, and the total base cost for a Chapter 13 bankruptcy falls within the $3,800 to $5,000 range depending on your household income. While this may sound expensive, it may be worth the cost. If you owe thousands in debt, a bankruptcy will only cost a small portion of that amount to wipe out all or part of your debt so that you can move forward with your life.
Call a Bankruptcy Attorney To Find Out Your Options
You have many options to pay down or get rid of your debt using your $1,400 stimulus check. Don’t feel like you have to give everything to your credit card companies, past-due medical bills, or other lenders. Our attorneys can help you determine whether bankruptcy would be a good option for you.
Call The Law Group of Northwest Arkansas LLP today at (479) 316-3760.