Research Shows Bankruptcy Filings Increase after Tax Refunds Received
presented by: Gary Massey
If you are one of the fortunate few who is receiving a tax refund this year, your mind may be filled with wonderful possibilities on how to spend it; however, for Americans who may be in financial trouble, a refund may allow a person to finally file for bankruptcy as a way to resolve monetary difficulties. According to The Huffington Post, new research conducted by economists at Columbia University, the University of Chicago, and Washington University in St. Louis shows bankruptcy filings increase after tax refunds are received. The reason for this is the increasing costs associated with filing for bankruptcy.
The research revealed that the total amount of bankruptcies in 2008 rose seven percent after Americans received their tax refunds, as most may not have been able to afford bankruptcy filing until Uncle Sam issued their refund. Filing for bankruptcy hasn’t always been as expensive, and the rise in filing costs can be attributed to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. This act increased the legal and administrative fees needed to file for bankruptcy by an astonishing 60 percent, and it also required individuals to pay for their own credit counseling before filing.
The authors of the study basically concluded that these increased fees prevent households that are low on cash from filing for bankruptcy. Total bankruptcies rose two percent after tax refunds in 2001, but the seven percent increase in 2008 is more than a threefold increase according to the report.
The costs associated with filing bankruptcy can be very expensive, so seeking the help of a knowledgeable Tennessee bankruptcy attorney is essential so that your case will be efficiently handled in order to keep the costs at a minimum. At Massey & Associates, PC, we have years of experience helping TN residents who are filing for bankruptcy and will work with you through your entire case, answering any and all questions along the way. Please call (423) 697-4529 to discuss your bankruptcy case with a member of our legal team.
