Consider the Consequences of Filing for Bankruptcy
Filing for Chapter 13 or Chapter 7 may be an option if your debt is out of control. Chapter 13 requires a payment plan in which you pay off all or part of your debt. Chapter 7 gives you a fresh start and you are requied to rebuild your credit rating from scratch. In either case the burden of debt and legal action will be eased, but both have consequences that are important to understand prior to filing. 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 reach a Cincinnati bankruptcy court. If you are considering a Chapter 13 or Chapter 7 filing, be sure you speak with your attorney considering all of the filing.
You need to understand what, if anything, will change your taxes, should you choose to file. If you receive refunds at the end of the year, you may have to forfeit this. It is viewed as disposable income and you may end up losing 50% to 100% of the return. However, protection for this money is available. Another choice is to claim higher withholdings throughout the year. This puts more money into their pocket on the monthly basis and creates a situation where you receive no refund. However, be sure to increase the withholdings without creating risk of taxes being due in April.
You can also protect your refund by placing the money into a retirement account throughout the year. While you will have less access to your monthly income, the money will be protected in a tax free account that is not vulnerable to creditor attack. 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, it can reduce the options you share with your spouse concerning home ownership. They will be taking on some of the consequences of your filing, which is important to understand before you file.