Dealing with bankruptcy can be a really stressful thing if you aren’t sure as to how you’re going to take care of it. When you talk to a bankruptcy lawyer, you will find that there are a lot of things that you need to consider to make it all work in your favor, including options for bankruptcy and troubled debr restructuring as well.
Chapter 7 Bankruptcy: Chapter 7 Bankruptcy is when bankruptcy is filed and all debts are cleared except for a few things. Most people know that you cannot eliminate student loans, but you also cannot get rid of back taxes from three years back, any of the taxes that you haven’t even filed for, and taxes that aren’t necessarily being paid because of fraud or evasion techniques. Chapter 7 can only be filed if you are struggling to get your monthly living expenses and absolutely cannot pay your debts.
When you go to file taxes the season following your bankruptcy, you may lose any refund that you would normally be entitled to so that those you had your debt cleared from can get at least a little bit of their money. Anytime after that, you will always receive it.
Chapter 13 Bankruptcy: Chapter 13 Bankruptcy or “reorganization bankruptcy” is when you still have to pay back your debt, but the court which you filed with oversees a monthly payment plan that goes toward all of your debts instead of you having to deal with each company that you owe individually. This helps insure fairness to you and also helps you to not get in more financial trouble by not being able to afford your living expenses. Although the IRS is a federal entity, they are required to follow the payment plan that the court decides for a bankruptcy case, which can give you relief.