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| What Bankruptcy Can't Do For You |
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| Written by Pamella Neely |
| Thursday, 11 December 2008 12:38 |
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Bankruptcy is an official, legal declaration of a debtor's inability to pay off large amounts of debt. When you declare bankruptcy, the bankruptcy court will clear view of all responsibility for the debts which are illegally dischargeable. There are two kinds of bankruptcy available to debtors in the United States - Chapter 7 and Chapter 13 bankruptcy. Chapter 7, also known as liquidation bankruptcy, is the most common kind of bankruptcy. It also offers immediate relief from creditors. After a successful chapter 7 filing, all dischargeable debts are wiped out. In Chapter 13 bankruptcy, the debtor will have a repayment plan so that they can pay off all their debts over a period of time. Some debts may be erased immediately, but this doesn't always happen. One major advantage of Chapter 13 bankruptcy over Chapter 7 bankruptcy is that the debtor may be allowed to hold on to some assets which would have been otherwise liquidated under Chapter 7. Unfortunately, there are some debts which are only dischargeable under chapter 13 bankruptcy, and certain debts which are not dischargeable at all. Other debts are dischargeable only under chapter 13 bankruptcy, including: - Marital debts incurred in a divorce or settlement agreement - Debts incurred to pay a non-dischargeable tax debt - Court fees - Condominium, cooperative, and homeowner's association fees - Debts from retirement plan loans - Debts that could not be discharged in a previous bankruptcy Debts which are not dischargeable by any means include: - Domestic support obligations, such as alimony and child support payments - Student loans, except in cases of undue hardship - Debts incurred by acts of fraud - Debts which arise from willful or malicious acts - Criminal penalties - Intoxicated driving debts Income tax debts can be discharged; however, certain circumstances must be met. For such debts to be discharged, the debtor must have filed a tax return for the tax year in question; the debt must arise from a tax return filed at least two years before the filing; the debt must arise from a tax return that was due at least three years before the filing; and the taxing authority must not have assessed the debtor's liability for the taxes within the last 240 days. For a bankruptcy filing to work out the debtor must honestly list all debts and obligations. Debts which cannot be assessed for reasons which are under the debtor's control (e.g. the debt is not listed or the address given is incorrect) may not be cleared. Life after bankruptcy can be as hard or as easy as the debtor makes it, to a certain extent. A bankruptcy filing in one's credit report will make it harder for him or her to be granted credit in the future, and under chapter 7 bankruptcy, certain assets may be liquidated. However, the debtor can prevent creditors from taking his or her bank account or wages - though liens on a home may still remain. Being honest with your bankruptcy lawyer and cooperating with the court and creditors may make life easier after a bankruptcy filing - hiding secrets from your lawyer and the court can only cause more problems. While filing for bankruptcy can relieve one of the burdens of debt, a debtor must do his or her due diligence to make sure that all dischargeable debts are, in fact, discharged and to know which debts cannot be discharged. Though a person sometimes must file for bankruptcy because of medical bills or other forces beyond their control, remember that you control what becomes of your life after bankruptcy. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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