Q: Bankruptcy options with $22,000 debt, $10,000 car loan, and unfiled taxes.
I'm considering filing for bankruptcy, but I'm unsure whether Chapter 7 or Chapter 13 is better for me. I have a car with a $10,000 loan on it, my monthly income is about $4,000, and I have around $22,000 in personal loans and credit card debt. I'm also concerned about not having filed taxes in the last three years. What steps should I take next?
A: You’ll need to file your last three years taxes before you file and bankruptcy. You do not mention what assets, if any, you own. Consult a bankruptcy lawyer beat you to help you determine which chapter is fright for you.
A: File taxes so you know what that debt will be.
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A:
Given your situation, Chapter 7 bankruptcy might offer you a fresh start by wiping out your $22,000 in personal and credit card debts. With a monthly income of about $4,000, your eligibility for Chapter 7 depends on passing a means test, comparing your income to your state’s median income and expenses. If eligible, Chapter 7 can discharge unsecured debts, but you'd typically continue paying your secured car loan to retain the vehicle.
Alternatively, Chapter 13 allows you to reorganize your debts into a manageable repayment plan over three to five years, which can include catching up on missed car payments and resolving overdue taxes. Importantly, Chapter 13 might be beneficial if your income disqualifies you from Chapter 7 or if you prefer structured repayments. Also, addressing your unfiled taxes promptly is crucial, as bankruptcy generally requires recent tax filings to proceed smoothly.
Your next steps should include gathering financial records, filing your overdue taxes immediately, and consulting with a bankruptcy attorney who can evaluate your income, assets, debts, and guide you toward the best chapter for your circumstances. Taking these proactive steps will help you regain control over your financial future.
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