Filing a chapter 7 or chapter 13 bankruptcy allows you to get the fresh start you deserve. A chapter 7 bankruptcy is roughly a 90-day period from date of filing to date of discharge. A chapter 13 bankruptcy is a 3-5 year affordable payment plan specifically based on your income and expenses.
There are no tax consequences during or after you have filed a bankruptcy. If debt consolidation saves you money, it may be considered income to the IRS and you will have to pay taxes on it. Creditors may report settled debts to the IRS.
Although a chapter 13 bankruptcy involves making monthly payments for a definite term, there is no interest associated. Debt consolidation programs always have interest on the payments and there is no guarantee that your consolidated debt will have lower interest rates. You will also accrue late fees an penalties while in debt consolidation, while in bankruptcy, you will not.
You may be thinking that debt consolidation sounds like the chapter 13 repayment plan, right? Wrong! Debt consolidation companies are not guaranteeing they will pay off all of your debt or even a portion of it. Lenders/creditors also do not have to accept settlement offers from debt consolidation companies. While in a chapter 13 bankruptcy, creditors have to file a claim to receive compensation from the bankruptcy estate, which ensures that they do receive a legitimate payment.
Filing a bankruptcy is a sure way to either discharge your debt, or make payments on some of the debt and discharge the remaining debt. Do you want to learn more about why bankruptcy may be the safest and efficient solution to your debt-related problems? Check out www.kainscott.com or give us a call!