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Loans, medical debt and credit card debt are generally all able to be discharged through bankruptcy. Tax debt, alimony, spousal or child support and student loans are all typically ineligible for ...
Once a bankruptcy discharge is granted, the debtor is no longer legally required to pay back the discharged debts, and creditors are prohibited from attempting to collect on those debts. This means that the debtor can have a fresh financial start and move forward without the burden of overwhelming debt. [2]
Some taxes are not discharged even though the debtor is generally discharged from debt. Many individuals in financial distress own only exempt property (e.g., clothes, household goods, an older car, or the tools of their trade or profession) and do not have to surrender any property to the trustee. [49]
The disadvantage of filing for personal bankruptcy is that, under the Fair Credit Reporting Act, a record of this stays on the individual's credit report for up to 7 years (up to 10 years for Chapter 7); [5] still, it is possible to obtain new debt or credit (cards, auto, or consumer loans) after only 12–24 months, and a new FHA mortgage loan just 25 months after discharge, and Fannie Mae ...
Key takeaways. Chapter 7 bankruptcy involves discharging debt through liquidation. Chapter 13 bankruptcy focuses on reorganizing debt through a repayment plan that typically lasts three to five years.
Key takeaways. There are two common types of bankruptcy: Chapter 7 and Chapter 13. Filing for bankruptcy is a time-consuming process that can take years to stop affecting your finances.
Common exceptions to discharge include child support, income taxes less than three years old, property taxes, student loans (unless the debtor prevails in a difficult-to-win adversary proceeding brought to determine the dischargeability of the student loan), and fines and restitution imposed by a court for any crimes committed by the debtor.
Chapter 13 bankruptcy allows people with regular income to repay debts over time, protecting assets and recovering financial stability. To qualify, individuals must meet income and debt limits and ...