03 Aug Bankruptcy FAQs You Should Read
Filing for bankruptcy is a painful and exhausting process. Folks often feel ashamed, scared, or confused. If you find yourself with no other options, bankruptcy can be a way to remove old debts, change financial patterns, and, most importantly, get a fresh start. Here is everything you need to know about filing. Read the Bankruptcy FAQs.
*The information provided in this blog can be obtained on the internet. SFS Tax is a tax resolution firm and does not offer legal advice or opinions.
Note: Depending on what type of taxes you owe, you might not be able to wipe out your back taxes in bankruptcy proceedings. Our firm specializes in tax resolution and back tax debt settlements with the IRS. So, if you’re considering filing in part because of your back tax burdens, reach out to us today for more information on how you can get tax relief. Contact us now.
Bankruptcy FAQs #1
- Who Should File for Bankruptcy?
If you owe money to a creditor, the IRS, or a state government and cannot repay it, you may be able to file for bankruptcy. Businesses and individuals are eligible; however, there are caveats. If you have filed for bankruptcy once before, there is a waiting period before you may file again. After filing for Chapter 7, you cannot claim bankruptcy again for eight years. After filing for Chapter 13, you must delay a second claim for at least two years.
Bankruptcy FAQs #2
- What Types of Debt Can I Discharge?
You can discharge most types of debt through bankruptcy, including some tax debts, medical debt, credit card debt, payday loans, and mortgage debt.
Certain types of debt cannot be discharged, meaning that you will still need to repay these debts even if everything else is forgiven. Spousal support, child support, student loans, and back taxes in certain cases are debts that cannot be wiped out in bankruptcy.
Any debt you take on after you’ve filed is ineligible to be discharged through the filing since you did not have the liability when you asked for debt relief.
Bankruptcy FAQs #3
- Why is Filing For Bankruptcy Helpful?
When you can’t keep up with the bills, you’re under a high level of stress. Bankruptcy is never the first option for people; many have tried things like getting extra jobs, selling unwanted possessions, or asking family members for loans before deciding to file as their best option for debt relief.
Collectors are not allowed to come after individuals who are going through bankruptcy, so threatening phone calls and letters will end immediately.
A Chapter 13 bankruptcy can promote good financial habits because, in this form of bankruptcy, some amount of debt is repaid under a plan. By helping to increase financial literacy and instilling good financial habits, this partial repayment can keep people in the black once debts are discharged.
The biggest downside to filing for bankruptcy is that it impacts your credit, so you may find it challenging to take out loans for up to ten years after the bankruptcy. Your credit score also affects things like the interest rate offered on loans and your ability to pass a tenant screening, so there are other ramifications to consider.
If you’re not sure whether a particular debt will be forgiven or which type of bankruptcy is right for you, there are resources to help you explore your options, such as attorneys. If you are thinking of filing for bankruptcy, it’s helpful to get a legal expert’s opinion on your specific circumstances and what to expect before and after filing.
If you have back tax debt, we highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation. Contact us today.