While saving up to declare bankruptcy sounds odd, that’s exactly what many people have had to do since the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act was passed. Many families wait for their tax rebate to file for bankruptcy, and this trend has been increasing as costs related to filing have gone up.
Dr. Gross notes that bankruptcy, for all its negatives, can be an economic boon. Bankruptcy allows for renewed spending, he adds, acting as an economic stimulus. For these reasons, he says, “Lowering barriers to bankruptcy, as long as they don’t encourage excessive consumer borrowing, would be a win-win.”
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