Tax issues
If you have unfiled tax returns, you are ineligible to file for bankruptcy because unfiled tax returns can cause complications during the bankruptcy process. Typically, you must provide your attorney with the last two to three years of tax returns prior to registering for bankruptcy. If you have outstanding tax returns at the time you file for bankruptcy, you must file all delinquent tax returns within one week of your bankruptcy hearing.
In accordance with Chapter 7 Bankruptcy, taxes are not discharged or eliminated. However, there are exceptions, such as when taxes are older than three years and are filed on time. Before filing for Chapter 7 bankruptcy, it is preferable to establish a repayment plan with the IRS or local tax authorities.
According to Chapter 13 Bankruptcy, taxes that are not considered dischargeable unsecured debts are required to be paid monthly.
Child Assistance
Child support payments and all types of child support arrears are considered debts that cannot be discharged in bankruptcy. The most recent revision to the bankruptcy laws requires the trustee to look for any domestic support obligations and provide the recipient with any relevant information. Chapter 13 bankruptcy requires all domestic debts incurred after the filing to be current.
Independent employment
It is not true that business ownership precludes bankruptcy eligibility. Sometimes, self-employment can be challenging. Without accurate income records, self-employment can be a difficult bankruptcy case. For a self-employed person to file for bankruptcy, essential documents such as the Statement of Financial Affairs, the statement of profit and loss, and a business questionnaire are required.
Student loans
In bankruptcy, student loans are also considered dischargeable. Due to certain debt limits, student loans can also disqualify you from many varieties of bankruptcy and make it more difficult to fund a Chapter 13 repayment plan.
Inheritance proceedings
In this situation, the trustee has the opportunity to repay creditors and make the case more profitable. Therefore, you must always disclose these circumstances, as concealing them may result in worse outcomes. Your attorney will determine the extent to which these assets are protected by bankruptcy exclusions.
Large payments to creditors upon bankruptcy filing
Do not make substantial payments to a specific creditor prior to filing for bankruptcy. This situation is referred to as a preferential payment or Preference. In this situation, demonstrating favoritism to one creditor over another could land you in hot water.
Other instances
If you have transferred assets, taken cash advances, or maxed out your credit cards prior to filing for bankruptcy, you will inevitably encounter difficulties. If the court believes that you have misled about your assets, you will be held responsible for your debts, and your discharge may be denied. In the worst instances, those who conceal their wealth face criminal prosecution.""
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