Using Tax Returns for Bankruptcy Auto Loans

It's close to tax time and if you are thinking about using your tax refund as a down payment to buy a car in open bankruptcy you might want to think again. This is because any tax withheld by the government is considered an asset, and is therefore, entitled to the trustee appointed to your case. The refund and can intercepted and used to pay back your creditors.

Keep Your Tax Refund for Yourself

When you file your bankruptcy can play a huge role when it comes to getting your income tax refund. For example, if you file on December 30 the bankruptcy estate (assets owned by the debtor but held by others at the government) is 364/365ths of the income tax refund for that year. On the other hand, if filed on February 1 the entire refund for the previous year ( even if it's yet to be received ) can be considered part of the bankruptcy estate.

There is a way to ensure your refund is not intercepted by the trustee, which is to have no refund. This means only having the necessary taxes withheld from each paycheck to ensure you do not owe the IRS at the end of the year. This is allowing you to get more money each paycheck and to save the money that you rightfully deserve.

Finance a Vehicle with Bankruptcy on Your Credit

Whether you are able to use your tax refund or you borrowed money from a family member or friend it is important to have a down payment when applying for a bankruptcy auto loan. This is because the interest rates on subprime loans are much higher than "normal" loans, and having a down payment will help make your monthly payments more affordable and easier to be approved.

When you are ready; fill out our online application to see if you are preapproved. We will send your information to a dealership accepting bankruptcy clients near you, and if you meet their minimum requirements we will schedule an appointment. You could be driving off in your new car in a few short days!

Remember we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.