Government debt relief services include the federal bankruptcy process for individuals and businesses, as well as payment plans for delinquent federal and state tax liabilities. Not everyone qualifies for bankruptcy assistance or a tax payment plan and in some cases a debtor should hire an attorney for help.
Tax Assistance
Failure to pay your taxes can lead to liens against your assets and in extreme cases jail time, warns the Internal Revenue Service. Tax bills incurred less than three years ago must go through the taxation agency and not the federal bankruptcy process. The Internal Revenue Service and most states offer installment payment arrangements. At the time of publication, people owing less than $25,000 in federal tax bills can apply online for a payment plan.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy discharges many pre-existing debts, with the exception of child support, alimony and court fines. Generally, a debtor must earn less than his state's yearly median income figure to file Chapter 7. At the time of publication, the annual median income level for a single Nebraska resident is $38,915, while the yearly figure for a family of four in Hawaii is $86,587, according to the U.S. Trustee Program. Chapter 7 will damage a consumer's credit rating for 10 years from the date of case filing.
Chapter 13 Bankruptcy
People who want to keep more personal assets than permitted in Chapter 7 tend to request a partial debt repayment plan in Chapter 13. It takes three to five years to finish a Chapter 13 plan; during this time a debtor cannot get new credit accounts without a judge's permission. A Chapter 13 case damages credit ratings for seven years from the date of filing.
Corporate Bankruptcy
Self-employed individuals and businesses in financial trouble can also take advantage of government debt relief services. Corporate Chapter 7 bankruptcy absolves the company owners of all business debts, but also dissolves the company's operations, notes the U.S. Securities and Exchange Commission. Court officials sell all business assets and distribute any proceeds to creditors and stockholders. People wanting to keep their businesses functioning can partially repay debts under Chapter 11 bankruptcy. Unlike other types of bankruptcies, you can manage personal debts through Chapter 11. An attorney's help is required to file any type of business bankruptcy.
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