Take into Account the Consequences of a Bankruptcy

March 7th, 2010 | Posted in Uncategorized

Filing for Chapter 13 or Chapter 7 may be an option if your debt is out of control. Chapter 13 allows you to create a payment plan over the course of several years in which you pay off all or part of your debt. Chapter 7 is a type of fresh start where your debts are wiped out and you are requied to start over building credit. In either case the burden of debt and legal action will be eased, with certain legal requirements and consequences. Either Chapter 7 or Chapter 13 are lengthy commitments. You are committing to paying off or removing your debt and solving a problem, but on the other hand, you have labeled yourself for a long time. This means different things for individuals, but it is important to understand all of the ways in which a filing will affect you. Cincinnati bankruptcy attorneys will explain your options and obligations before you get into a Cincinnati bankruptcy court. If either option is in your future, be sure you talk to a professional before filing.

You need to understand what, if anything, will change your taxes, should you choose to file. If you are used to receiving a refund at the end of the year, this may be vulnerable to creditors if you have filed. It is considered disposable income and you may end up losing 50% to 100% of the return. However, protection for this money is available. Some choose to claim higher withholdings from your income. This puts more money into their pocket on the monthly basis and creates a situation where you receive no refund. However, you must be careful to increase your withholdings properly to avoid owing tax at year’s end.

You can also protect your refund by placing the money into a retirement account throughout the year. This leaves you with less access to your monthly income, but keeps the funds safe from creditors. This also enables you to plan for the future and it gives you something to look forward to once you repayment period has ended and it is time to retire.

Filing Chapter 13 and Chapter 7 will affect your ability to get credit in the future. For up to a decade you may find yourself unable to get loans for vehicles or mortgages, and you may be denied unsecured credit like credit cards. It may also be difficult for you to find employment, to open a checking or savings account, or to gain certain clearances affiliated with employment.

If you plan to marry, your prospective spouse can be affected not by being held liable, but having their options reduced when it comes to owning a home or getting a fair interest rate on loans. You will be asking them to take on some of the consequences of your filing, which is important to understand before you file.

Connor Sullivan recently worked with a group of Cincinnati bankruptcy attorneys while conducting research for a new article. He learned about providing debt restructuring while observing aCincinnati bankruptcy court. Get a totally unique version of this article from our article submission service