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Bankruptcy filings increase during tax season

In the board game Monopoly, bankruptcy generally means that the player is out of the game. There is no starting over. That's a game.

In real life, bankruptcy is a legal process that helps a person manage their debt, either by restructuring payments or, sometimes, wiping it clean. There are many different types methods that depend on a person's individual situation. People file for bankruptcy when debt becomes too much of a burden, when it's a negative cycle that hurts day-to-day life.

It's a complex legal topic. As most people know, legal processes require time and money. There are different ways to pay for a bankruptcy filing, including payment plans and aid programs.

Paying down debt can be a relentless cycle

One common way that people pay for bankruptcy fees is with a tax return. USA Today reported during last year's tax season that bankruptcy filings in March increase by more 25 percent over the monthly average. It's similar in April, with a 20 percent above average. Two notable things happen during tax season: people review their overall financial picture and they get a tax return.

Broadly speaking, most Americans spend their tax return on a significant purchase. For some that's a vacation or new electronic device. For many, it's to pay down debt with their eye on reducing monthly bills. Too often, a tax return payment isn't enough to reduce the stress of debt and the cycle continues without resolution.

Payment of legal fees may not be glamorous, but debt relief can be life changing. Filing for bankruptcy allows greater financial flexibility to meet existing obligations and to get a foot toward a debt-free future.

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