Oh boy, dis something stupid with tax refund! pls help...

[jillian763]

Today I did my taxes with H&R Block and did what I always have done for the past five years, got a "rapid refund (loan)". BUT, I am in the process of filing for bankruptcy, (almos paid attny fees in full). I happen to have a credit card with Best Buy (HSBC) and they are the bank issuing my rapid refund loan. I signed paper work that says in the fine print that I am giving them permission to serve as a debt collector to any affiliated creditor. It says I have 5 days to change my mind about the loan, but if I do, my federal refund is still going to be issued to them. Will they be allowed to take my refund for the debt I owe? I am so stupid, I did not even think about my debt b/c I do not owe the government anything...Any advice???

[BananaCabana]

I hope you don't get mad at me for saying this but you should never go for those Rapid Refund loans or RALs (refund anticipation loans) as they are major rip-offs. The interest they charge is borderline criminal and the fees on top of the interest is astronomical. It is all about making money for them. I used to work for a name-brand tax service and would not recommend those to anyone. Ok, now, let's get passed that issue....

I really don't know if they will be able to take your refund or not. I know that the IRS can withhold your refund if you owe back taxes, back child-support, etc. But as for the issuer of your loan I can't give you an absolute answer. Hopefully someone more savvy than I can. It does sound as though there is a possibility that they could take it although I would be more inclined to think that they are two different beasts and one can not be tied to the other. I imagine one would have to read the fine print very carefully to see if they really have any legal right to your refund. Does it mention anywhere that your refund is contingent on anything or that it can be used as collateral?

[jillian763]

Thanks for the response! I keep re-reading the fine print and I feel like it is very vague. Every paragraph ends with "for more info..call 1-800 blah blah"
I called and their office is closed, prob for the weekend. But I face the issue of having to talk to a company that I owe money to, and that I haven't spoken with since not paying credit card in June 09. I tried H&R block immediately after filing and they said there was nothing to be done since my return already reached the IRS. I really needed the money for necessary car repairs. I feel like I'm going to kick myself in the a** for the rest of my life for this stupidity!

[BananaCabana]

When you call them don't mention that you have an account with that bank or who you are unless you absolutely have to. Just ask them a vague question like: "Is there anyway that anyone can take this refund away from me before I get it?" That way you won't open any can of worms and send them into a money hunting frenzy for your account. And don't go kicking yourself. You would have only been stupid if you knew about the possiblity before you signed the refund loan. But you went into this not knowing there could be an issue. That is not stupidity. That is simply not knowing. There is also the very real possibilty that there is nothing to worry about. Try to breathe and enjoy the rest of your weekend. You can always try to create a mindset so that if the money is lost then "Oh, well. What's done is done." and move on (easier said than done, I know). Then when you do receive it it will be like a heavenly gift!

[jillian763]

Thank you, your words are very much appreciated!

[LadyInTheRed]

You might also try calling the IRS to see if you can get them to send the refund to you instead of HSBC.