You Need to Learn These 5 Things About Bankruptcy!
Before filing bankruptcy, many people have an idea of what the process will be like and how it can be used to discharge debts. On the other hand, many people who are facing insurmountable debt have the wrong idea about bankruptcy or do not know about all of its benefits. Here are five things you probably did not know about bankruptcy. Learning these facts can help you decide if bankruptcy is the right choice for you: 1) Not everyone can file bankruptcy. While bankruptcy is often promoted as the solution to debt problems, there are people who are barred from filing due to their inability to meet statutory requirements. Chapter 7 bankruptcies are limited to those who do not exceed a certain income level, and the ratio of debts to assets may bar others from filing Chapter 13. The means test is designed to determine who is qualified to file different types of bankruptcies. 2) Bankruptcy does not discharge all debts. In some cases, debts are not discharged by bankruptcy. For example, most taxes are exempt from bankruptcy proceedings, so if you owe the IRS or a state taxation agency, bankruptcy may not solve your problem. Student loans are another classification of debt that is often exempted from bankruptcy proceedings. Student loans are usually guaranteed by the government. That being the case, the government is reluctant to allow debtors to discharge these loans as part of a bankruptcy since that would put the burden of repayment on the taxpayer. Finally, child support and alimony payments are usually not covered in bankruptcy. 3) There is a different method for discharging secured and unsecured debt. Chapter 7 is usually reserved for those who have a lot of unsecured debt, although you can still file even if you have some assets. Chapter 13 is often used when a debtor has large amounts of equity in a home or car. Both accomplish the same purpose: a discharge of outstanding debt. They simply do it in different ways. 4) You can use exemptions to shelter some assets. All types of bankruptcy contain statutory exemptions to protect your home, car, personal possessions and money. The amount depends on the type of bankruptcy, whether you are filing jointly and other factors. 5) Bankruptcies are not DIY efforts. A bankruptcy attorney is not really a luxury. Bankruptcies are so complicated, it is usually necessary to have an attorney to guide you through the process. For more information on bankruptcy, contact Oswalt Law Group in Phoenix today.