Many Americans recently filed a tax return only to discover their refund was not what they had expected — or worse. Others might have prepared the documents only to seek an extension due to an unplanned need to pay.
Now, the realization sets in that financial hardships remain or might have worsened.
Right now, foreclosures are increasing following all of the relief and moratoriums, while adjustable-rate mortgages are going up. The restart of student loan debt repayment continues to loom.
Individuals seeing renewed or increased difficulty meeting debt obligations need to know bankruptcy can help provide a path forward.
Attorneys at Sader Law Firm regularly help keep individuals and families in a residence, stop calls from creditors and develop a plan to meet the specific needs of their situation. However, those considering bankruptcy should keep a few things in mind:
- While most types of personal obligations can be discharged through bankruptcy, debt determined to be incurred by fraud cannot be. This specifically includes any instances where an individual provided false or misleading information in the process of obtaining a loan, especially when completing loan applications.
- A person who chooses to file bankruptcy cannot run up a credit card or credit cards over $800 for what is determined as “luxury goods” within 90 days of filing. The law automatically deems this to be fraud and makes that debt nondischargeable. The same goes for extensions of consumer credit of more than $1,100 from a single source within 70 days of filing.
- Keep in mind that income taxes can be discharged if the returns were filed and the returns were due more than three years before filing for Bankruptcy. As a general rule, taxes incurred within the last three years are not dischargeable. However even if taxes are within that three-year period of time, in a Chapter 13 the amount due can be scheduled pursuant to the Chapter 13 Plan and can often offer a smaller payment amount than offered by the IRS.
- An attorney is the best person to help determine whether Chapter 7 or Chapter 13 filings are the most beneficial. Filing fees remain relatively low, and seeking out informed counsel might add a bit to the initial bill but save money in the long run.
- Credit scores often suffer after filing bankruptcy, but since past due bills and lawsuits are included in the bankruptcy, improving your score after filing can be done relatively quickly. There are a few simple rules to follow that your attorney can provide you.
- Student loan debt continues to be a nebulous and difficult area to navigate. Until the federal government issues more direct guidance, borrowers should assume student loan debt cannot be fully discharged, unless you qualify for a hardship discharge. An attorney can help provide specific guidance after reviewing the full financial picture for a family or individual.
If you have a question about personal debt and would like to hear more about bankruptcy options, contact Sader Law Firm today at 816.561.1818 to speak with one of our experienced attorneys and receive a free phone consultation.