Determining Bankruptcy Debt Priorities

Determining Bankruptcy Debt Priorities "If you are ever required to file for bankruptcy, you must keep in mind that certain debts must be repaid prior to others. Below, we examine what are considered to be the essential debts that must be repaid to creditors following a bankruptcy filing. If a person chooses to disregard them, they may find themselves in a much worse situation, which could lead to homelessness.The first necessary debt to be paid is the mortgage or rent. This should be your top priority to ensure that you and your family have a roof over your heads. However, if you believe you will be unable to keep up with the payments, you should consider selling or renting a more moderately priced home.Before putting your property on the market, you must carefully weigh the benefits and drawbacks of selling it if you are considering doing so. The value of your property may increase if you delay six to twelve months before selling it, as opposed to selling it immediately. This could result in a small surplus of additional funds, which you can then use to pay off your most pressing debts.Other debts that should be prioritized for payment include those for your heating, electricity, water, and telephone services. Without these, life will become incredibly difficult and in some instances dangerous.If you have a car that was purchased with a loan, you will need to make sure that the payments are made on time. However, if this proves to be difficult, you may want to consider selling the vehicle and using the remaining funds (after paying off your creditors) to purchase something more affordable. However, if selling the vehicle would leave you without sufficient funds to purchase another vehicle, it may be prudent to return it to the dealer and prevent having it repossessed.Unpaid taxes owed to the Internal Revenue Service are one of the other essential obligations that a bankrupt individual must pay. Establishing a repayment plan is the quickest method to prevent them from taking money directly from your bank account, salary, or by seizing your home. By discussing the issue with the Internal Revenue Service, they are typically very willing to assist you in any way possible to resolve the debt.Prior to paying off any of your non-essential debts, it is imperative that you maintain payments on the above-mentioned crucial debts. It is more essential that you remain in your home with your family, where you are safe and warm, than that you pay a few dollars to a creditor. Explain your situation and make payment arrangements when you have sufficient funds to do so.This article describes the various types of bankruptcy-related debts that must be paid in order to prevent the situation from deteriorating. It is often advisable to obtain the assistance of a financial advisor or counselor when deciding between essential and non-essential debts.
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