True Myths Of Bankruptcy

True Myths Of Bankruptcy

MYTH: If I file bankruptcy, I will never obtain credit again.

After a bankruptcy case is filed, most, if not all, debt is wiped away giving a debtor a clean slate, resulting in a higher credit score over a short time and the ability to obtain credit. The filing of a Chapter 7 bankruptcy case significantly decreases the debt-to-income ratio which, to a potential lender, is a trait of someone who is an acceptable credit risk.

MYTH: If I file bankruptcy, I will be unable to discharge any tax debt.

Filing bankruptcy allows debtors to discharge income taxes that are more than three years old. Any income taxes that are dischargeable in a bankruptcy case have any attached penalties and interest also discharged. However, property taxes or sales taxes are not dischargeable in a bankruptcy case.

This determination requires the assistance of an experienced bankruptcy professional. Whether a tax debt qualifies for discharge is complicated since it involves the type of tax, the length of time of the unpaid tax, whether or not the debtor has filed a return, and the type of bankruptcy case filed.

MYTH: I may only file bankruptcy once.

Many consumers are unaware of the frequency with which they may legally file bankruptcy in the United States. Some believe that bankruptcy may be filed once in a lifetime. But this is untrue. While restrictions on serial bankruptcy filing exist, bankruptcy may be filed as long as an individual is eligible under the Bankruptcy Code, Title 11. These time limits do not apply to debtors who have not received a discharge in their previous bankruptcy cases

If you have received a discharge in a previous Chapter 7 Bankruptcy, then you must wait eight (8) years from the date of the previous Chapter 7 Bankruptcy case filing before you may file a new Chapter 7 case. If you filed the previous Chapter 7 case on February 26, 2014, you would be eligible to file and receive a discharge in another Chapter 7 Bankruptcy as of February 26, 2022. If you file a Chapter 7 case before the termination of the eight-year time-period, you will not receive a discharge in the second bankruptcy case and you will remain liable for all debts.

If you have received a discharge in a previous Chapter 13 bankruptcy case, then you must wait four (4) years from the date of the filing of this previous case to file and receive a discharge in a Chapter 13 bankruptcy case. For example, if the previous Chapter 13 case was filed on February 26, 2014, you will be eligible to file a Chapter 13 bankruptcy case and receive a discharge as of February 26, 2018.

MYTH: Filing bankruptcy is difficult.

While filing bankruptcy involves a substantial amount of information gathering, an experienced attorney will make the process less complicated and therefore less stressful. The filing of a bankruptcy petition and all other documentation filed after the petition must be done electronically online which simplifies the majority of the bankruptcy process.

The Morrison Law Group can help if you owe back taxes. We can help in any situation where creditors are placing unwanted pressure on your life. The Morrison Law Group can help if you just need to talk about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, Orem, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

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