The first three and a half months of the year are big for the tax industry, but could it also be big for bankruptcy too? Tax refunds are often used by people as a way to catch up on bills, but for those too far behind, it could provide the resources to pay the legal fees associated with bankruptcy.
Marriage and financial stability often go hand-in-hand. The divorce rate spikes from January to March, so it may be no surprise then to learn that the rate of bankruptcy filings rises at the end of tax season. Like a marriage, finances can reach a breaking point too. But, like a divorce, bankruptcy can be a fresh start for people in debt.
Can I discharge debt after divorce?
Divorce brings the splitting of income, assets and debt. Although debt can seem like an undue burden following the emotional toll of divorce, some debts can be discharged in Chapter 7 bankruptcy, the most common type of filing. Child support and alimony payments are generally categorized as non-dischargeable debts in bankruptcy.
However, life changes after divorce, which can result in some people later seeking modification of child support and alimony. in the law now allow divorced spouses considering bankruptcy to amend child support and alimony payments in some circumstances.
Tax refund may cover the cost of bankruptcy
When money is tight, consumers become particularly price conscious. Tax refunds averaged nearly $3,000 per person in 2016. Meanwhile, the average cost of bankruptcy sits at $1,500 according to USA Today. These numbers are welcome news to those considering bankruptcy after divorce.
Divorce can have a significant impact on retirement assets and quality of life. According to USA Today, bankruptcy is worth considering for people who are unable to afford retirement contributions or car payments after divorce. These factors are also important considerations for those who wish to discharge or modify child support and alimony payments after divorce.
Finances can be complicated after divorce. For those considering bankruptcy after marriage ends, a legal professional who specializes in bankruptcy can explain the law and provide protection against creditors.