Tax refunds fuel bankruptcy filings; counselor notices shifts in attitudes as bankruptcy becomes more commonplace

March 27th, 2009 by Mike Hinshaw

Tax RefundReports from Florida suggest folks are using this year’s tax refunds in a way that may have been unthinkable only a few years ago while at least one Detroit paper is saying that filing bankruptcy is losing its long-associated stigma of shame.

Writing March 11 in the Orlando Sentinel, staff writer Richard Burnett cites several sources indicating that tax season has also become bankruptcy season: Traditionally, tax refunds have gotten socked away in savings or gone to pay worrisome bills, perhaps a down payment on a new car or equipment–or even an indulgence such as a vacation or luxury item.

But this year, more people are using their refunds to pay for filing bankruptcy.

“Hit by job losses, health problems or heavy mortgage debt,” writes Burnett, “some cash-strapped consumers are counting on refunds to handle the legal costs of filing personal bankruptcy. Read the rest of this entry »