Financial challenges and overwhelming debt are problems for many Mississippi residents. Struggling with debt may lead to physical and emotional exhaustion, especially if the person has to moonlight. Paying back creditors is a weary task. However, many people choose to go this route because they think filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy may cause additional financial struggles.
Some debtors do not realize that choosing a route other than bankruptcy could mean losing funds in a retirement account because of the need to pay back creditors. In most cases, a bankruptcy filer does not need to relinquish assets held in an Individual Retirement Account (IRA) or a 401(k) plan. These types of funds are typically protected by bankruptcy regulations. Consulting with a bankruptcy attorney can help clarify the pros and cons.
Legal counsel may also help a client get a better settlement with creditors. It’s important to understand that debtors opting for debt settlements may need to pay taxes on the forgiven amounts. A debtor facing serious financial challenges may not have the money available to pay back the Internal Revenue Service. Furthermore, IRS debts generally cannot be forgiven in a bankruptcy. This makes obtaining good debt forgiveness terms all the more important.
An individual contemplating filing for Chapter 7 bankruptcy first needs to pass a means test. A bankruptcy attorney can help a client fill out the legal paperwork required to determine if the debtor qualifies. Setting up an appointment with a bankruptcy lawyer is the best way to make a wise decision.