Filing for bankruptcy is a huge financial step that helps countless families get back on track by either eliminating debt or refinancing it into more manageable payments. The newest stimulus check may create some questions or doubts about your current or upcoming bankruptcy process. We set out to answer your most important financial and bankruptcy questions in regards to the new stimulus check from the American Rescue Plan!
Am I Eligible to Get a Stimulus Check?
Eligibility to get a stimulus check is not based on whether or not you are filing bankruptcy, instead, it is based on your income. If you are making under $75,000 individually, you can expect to see your entire $1,400 stimulus. Those making between $75,000-$80,000 can expect a reduced stimulus but will still get a check. Additionally, if you don’t receive your stimulus, you can file for a rebate on your taxes and get the money later.
Will I Owe More in Taxes or Bankruptcy Because of My Stimulus?
Everyone hates having to report extra income on taxes, but the stimulus is considered non-taxable. The stimulus should be used to help sustain basic needs – such as paying for food, rent, and childcare. In turn, bankruptcy filers won’t have to report stimulus payments as income on new bankruptcy forms. People who receive coronavirus-related benefits before filing for bankruptcy don’t need to worry that the funds will affect their ability to qualify for bankruptcy.
Will My Check be Taken During the Bankruptcy?
The government has worked hard to ensure that the stimulus money you receive is given directly to your family. This check cannot be taken by past child support nor can it be taken to cover government debts, such as bankruptcy. Unfortunately, some private debtors can garnish your check if they have a lien against the account that it is deposited into. Making it more important than ever to file for Chapter 13 or Chapter 7 Bankruptcy to ensure you get this and any future stimulus payments – not your creditors.
Should I Pay Debts with My Check?
When you’ve spent time in debt, you desperately want to get out of it. Up to this point, you have probably spent every spare penny you earn trying to keep up with your bills. It’s understandable that you may want to use your stimulus check to chip away at some of these debts, however, this may not make the most financial sense for your case!
If you have filed for bankruptcy or are about to pursue bankruptcy, then your debt will already be either refinanced or eliminated. Instead, you should opt to use your stimulus check to meet current needs or start building for the future. You might choose to put your check back for an emergency fund, make plans to start a new business after the bankruptcy is finished, or even use it to pay an attorney to start the bankruptcy process that eliminates your debts.
If you’re in the process of filing or planning to file for bankruptcy, you shouldn’t worry about losing your stimulus check. In fact, bankruptcy may help to protect these important funds and ensure that they go directly to you to help you rebuild your life. Contact our offices to learn more about the bankruptcy process and how it can be beneficial during the current round of stimulus payments.