Filing for Chapter 13 or Chapter 7 is a last resort for those who are in debt over their head. 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 gives you a fresh start 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 are also committing to several years of being viewed as a major credit risk. 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 help you understand your filing rights 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.
It is important 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 considered 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 from your income. This gives you additional income through the year and creates a situation where there is no annual refund to garnish. 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. This leaves you with 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 get you denied future credit. For up to a decade you may be undesirable for mortgages, car loans, and unsecured credit. 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, so keep that in mind if you are considering this option.