Filing for Chapter 13 or Chapter 7 is a last resort for those who are in debt over their head. Chapter 13 requires a payment plan in which you pay off all or part of your debt. Chapter 7 is a type of fresh start where your debts are wiped out and you are requied to start over building credit. In either case the burden of debt and legal action will be eased, with certain legal requirements and consequences. Either Chapter 7 or Chapter 13 should be viewed as commitment. You are committing to paying off or removing your debt and solving a problem, but on the other hand, you have labeled yourself for a long time. This means different things for different people, but it is important to understand all of the ways in which a filing will affect you. Cincinnati bankruptcy attorneys will help you understand your filing rights and obligations before you reach a Cincinnati bankruptcy court. If you are considering a Chapter 13 or Chapter 7 filing, be sure you speak with your attorney considering all of the filing.

You need to understand what, if anything, will happen with your tax return, should you choose to file. If you receive refunds at the end of the year, you may have to forfeit this. It is viewed as disposable income and you may end up losing 50% to 100% of the return. However, protection for this money is available. Some choose to claim higher withholdings throughout the year. This puts more money into their pocket on the monthly basis and creates a situation where there is no annual refund to garnish. However, you must be careful to increase your withholdings properly to avoid owing tax at year’s end.

You can also protect your refund by placing the money into a retirement account throughout the year. This leaves you with less access to your monthly income, but keeps the funds safe from creditors. This also enables you to plan for the future and it gives you something to look forward to following your debt release.

Filing Chapter 13 and Chapter 7 will get you denied future credit. For up to a decade you may find yourself unable to get loans for vehicles or mortgages, and you may be denied unsecured credit like credit cards. It may creating difficulty finding a job, to open a checking or savings account, or to be cleared for certain types of employment.

If you plan to marry, it can reduce the options you share with your spouse concerning home ownership. You will be asking them to take on some of the consequences of your filing, which is important to understand before you file.

Connor Sullivan recently worked with a group of Cincinnati bankruptcy attorneys while conducting research for a new article. He learned about providing debt restructuring while observing aCincinnati bankruptcy court.

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