Many Americans are finding it difficult to come up with the money to file for bankruptcy protection. As a result, more than 200,000 families used their tax refunds in 2011 to pay for bankruptcy filing and legal fees, according to the National Bureau of Economic Research (NBER). Each year, personal bankruptcy filing rates spike in the first part of the year after Americans receive their tax refunds. The cost of filing for bankruptcy has jumped in recent years due to a reform in bankruptcy laws, just before the Recession. In 2005, the average cost of legal and administrative fees was $921 compared with the 2007 average of $1,477, according to reports from the U.S. Government Accountability Office.
Attorney fees make up the largest portion of the costs associated with filing for bankruptcy. Since the reform, attorneys are required to verify more information in a bankruptcy case than they did before 2005, which had a direct impact on the increase in attorney fees. The increase in bankruptcy filing fees has made it much harder for those who actually need to file for bankruptcy protection to afford it. Many who are in dire need of relief from their debt use their entire wages just to live and have little leftover for legal fees. The average tax refund is approximately $2,913 according to NBER, which is enough for many Americans to file for bankruptcy protection. The bankruptcy reform was initiated to deter abuse of the system. Since the laws have changed, fewer people have filed for bankruptcy. However, experts say that does not necessarily mean that the change has “curtailed abuse of the system.”
Click here to read more about using your tax refund to pay for your bankruptcy filing.
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
