Should You Use Tax Refund to Get Out of Debt? | McCarthy Law PLC
April 24, 2013

Should You Use Tax Refund to Get Out of Debt?

According to a new poll by the American Consumer Credit Counseling group, most Americans will use this year’s tax refund to pay down credit card debt.

This can be a smart financial decision, especially if your tax refund covers all of your credit card debt, giving you a fresh start. However, if, even after you apply your refund to your credit card debt, you still owe more than you did a year ago or you can still only afford the minimum payments, you would be wise to consider alternatives uses for your refund, including using it to jump-start a debt settlement plan.  A qualified debt settlement attorney will negotiate for a large reduction in your debts, giving you a fresh start without paying the entire amount claimed due. In essence, a tax refund could be used to pay down a portion of your debt, but not solve the underlying debt problem, or it could be used as part of a plan to settle your debts for significantly less than your creditors claim you owe.


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