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12-22-2017 03:25 AM
I would like to apply for bankruptcy and found some steps to file for personal bankruptcy. It's all, getting some bankruptcy certificates. Any idea on this? Whom should we contact to avail the same?
And I have to clarify certain doubts. How long will bankruptcy affect me? I think it remains on our credit report for almost ten years. Is the information true? Does this mean we can't avail credit anymore?
I need to know the important factors to qualify for bankruptcy. If someone has filed bankruptcy before, let me know the details. I would also like to meet some bankruptcy trustees in NorthYork to help me in the bankruptcy process.
Much awaited for your replies. Thank you.
12-22-2017 06:07 PM
Welcome to the H&R Block community.
So if you do file for bankruptcy the one thing that's kind of a positive is that forgiven debt is usually excludable from income when it results from bankruptcy. So if, for example, you lose your house but the remaining debt on it is forgiven once the bank sells it that forgiven primary residence debt is excludable.
Although this is generally an income tax question & answer forum, I do know a little bit about bankruptcy so I've got some information for you on that too.
You are correct that a personal bankruptcy will remain on your credit for a minimum of 10 years. Most banks will refuse to give you any kind of a loan until it goes away. For this reason you'll want to avoid bankruptcy if you can, especially if you anticipate needing credit. Ask your creditors to lower your payments, or for cars and/or houses ask if they would be wiling to move a couple of payments to the end of your loan so that you can have a month or two to get back on your feet. If you can afford to compromise on a payoff on a credit card or a credit line then make the bank an offer or ask what kind of compromise they would be willing to make to settle the account. They might just accept $6,000 instead of $9,000 to get something completely paid off.
If all else fails, pay the high balance items down first (for credit lines and car loans). This will eliminate high interest. Then pay off the smaller balances. Skip a month on the smaller balance items if you need to. Who cares about 1 late fee if you can save hundreds of dollars in interest. A late payment will hurt your credit a lot less than going bankrupt.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)
12-25-2017 10:33 PM - edited 12-25-2017 10:36 PM
Thank you for the reply. Any idea on consequences of applying for the same? I don't think, lowering interests will work, like it seems no other way.