The Cassidy Law Firm Blog

Monday, April 17, 2017

Consider Using Your Tax Refund to File for Bankruptcy

What does it cost to file for bankruptcy?

Your tax refund could mean many things, including a new car, much-needed vacation, or even a way out of oppressive debt.  Filing for bankruptcy can be costly, but your tax refund could offer just the funds you need to escape from your debt.  Chapter 7 bankruptcy can eliminate most or all of your unsecured debts, allowing you to achieve a fresh start in life.  Bankruptcy filings surge during the months of March and April each year, indicating that many Americans take advantage of their tax refunds to file for bankruptcy.  Our New Jersey personal bankruptcy lawyers at The Cassidy Law Firm discuss the costs of filing for bankruptcy and the potential benefits of Chapter 7 bankruptcy below.

Costs of Filing for Bankruptcy

Between filing fees and attorney fees, you should expect to pay $1,500 or more to file for Chapter 7 bankruptcy.  Filing costs will vary depending on the individual facts of your case.  In recent years, the cost to file has increased due to changes in bankruptcy laws that have made declaring Chapter 7 bankruptcy more complex.  For many Americans, your tax refund may cover the full costs of filing for bankruptcy.  The average refund last year was over $2,500.  

When Chapter 7 Bankruptcy Can Help

While it may be tempting to use your refund to catch up on your credit card payments, rent, mortgage, car payments, or other expenses, these steps may not alleviate the root of your problems.  It may be time to consider filing for Chapter 7 bankruptcy if:

  • You are struggling to pay your monthly expenses and find yourself hounded by creditors;
  • Your debt load exceeds 50 percent of your annual income;
  • Most of your debts are unsecured, including medical bills and credit card debt; ands
  • Your debt is interfering with your ability to enjoy your life.

For qualifying individuals, bankruptcy can offer a way out of your financial black hole and into a fresh financial future.  Bankruptcy will remain on your credit report for several years after filing, but most filers find they can rapidly rebuild their credit once they are free from overwhelming debt.  Contact a bankruptcy attorney in your area today for an evaluation as to whether Chapter 7 bankruptcy is right for you.  


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