Surprising facts about Chapter 7 bankruptcy

Filing for bankruptcy can offer individuals and businesses a much-needed fresh financial start during difficult times. However, before a case is filed, filers generally have plenty of questions. As a result, northern Mississippi residents who file for bankruptcy often find a consultation with a bankruptcy attorney to be just the beginning of a financial and legal learning process.

There are a few facts about Chapter 7 bankruptcy that many potential filers might not know. Some might assume Chapter 7 is only available to individuals; while it's true that individuals filing for Chapter 7 must fit certain requirements, Chapter 7's advantages are also available to businesses. Business owners who want to learn more about Chapter 7 for businesses can schedule a session with a Southaven bankruptcy attorney.

Anyone who has looked into personal bankruptcy might know that it can provide significant debt relief via liquidation. However, it is possible to keep significant items of personal property, such as a vehicle, while still filing for Chapter 7. This type of bankruptcy can relieve debtors, regardless of the total amount of debt owed or whether or not the debtor is considered solvent.

Another surprising fact that is that some filers can still receive tax refunds under Chapter 7. However, refunds may be delayed or some may be used to pay down debts. For those who file bankruptcy due to tax debt, there may be solutions in altering one's withholding or estimated tax payments. While many tax debts are not dischargeable under Chapter 7, according to the IRS some taxes are actually dischargeable. An experienced bankruptcy lawyer can explain more regarding taxes and personal bankruptcy.

Source: Internal Revenue Service, "Chapter 7 bankruptcy: Liquidation under the bankruptcy code," June 24, 2015

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