In the past, Americans have tended to put their tax refunds toward family vacations, new cell phones, and other fun indulgences.
This year, however, many cash-strapped consumers are spending their checks from Uncle Sam on something a little less frivolous - but potentially more rewarding in the long-run.
More than 200,000 Americans hope to apply their refunds toward a bankruptcy filing, according to the National Bureau of Economic Research.
Personal bankruptcy filings typically rise around the time when refunds get mailed out, but the surge should be even more pronounced in 2012, reports The Tennessean.
While Tennessee bankruptcy usually pays for itself many times over by helping consumers reduce all-consuming debts, it has become significantly more expensive since 2005, when U.S. bankruptcy laws were made more complex in order to prevent bankruptcy abuse.
As a result, many of the people who stand to benefit most from bankruptcy - such as families at high risk of foreclosure and swamped in credit card debt - tend to put off filing while they wait for an infusion of cash. Meanwhile, their debts grow larger and unpaid bills pile up.
Some argue that, rather than prevent bankruptcy abuse, the new laws have just made it more difficult for those most in need of help to receive relief.
With the average tax refund expected to be approximately $3,000 in 2012, many families will have more than enough to file for bankruptcy in Tennessee.
Obviously, consumers who can afford to pay down debt with their refund won't need to file. However, many of us have debts that have spiraled completely beyond our control.
Whether it's due to overwhelming credit card debt or massive medical bills, it can be almost impossible to catch back up when you've missed numerous payments and put your credit score through the ringer.
It may be hard to commit to covering bankruptcy costs when other bills need paying, but only bankruptcy has the ability to pay off for years to come. For many folks, bankruptcy has the power to stop foreclosure and either reorganize debts into manageable payments or discharge them entirely.
Filing for bankruptcy may not be as fun as putting your refund toward a family vacation, especially when you've been scrimping and saving for months and are in desperate need of a splurge. But bankruptcy can put you on the path to financial recovery so that one day you'll hopefully be able to enjoy life's little indulgences - without the guilt of having too much debt.
More Blog Entries:
Cash Refunds Provide Cash to File Bankruptcy, The Tennessean