Many consumers decide to file bankruptcy when one form of debt becomes
an issue to keep under control, such as
medical bills or credit card debt . But some consumers may not realize they can file
bankruptcy when dealing with multiple types of debt. Another common reason
for filing includes receiving a lawsuit or judgment related to old debt.
When considering filing due to multiple types of debt it helps to understand
your situation so you can obtain a favorable outcome for your finances.
Old debt may include different forms of debt including credit card, medical and
back taxes. Creditors have a certain amount of time to purse collection attempts
until it runs out; also known as statute of limitations. This can extend
for a few years to several depending on the type of debt and state regulations.
If limitations have passed on the debt, meaning creditors can no longer
collect against it, you don't want to make any payments on it since
it would restart the limitations again.
Current debt may include payments you're making on a vehicle loan,
mortgage or other accounts currently active. Bankruptcy may be sought
in this case if a consumer is looking to maintain their assets such as
their home or car.
Chapter 13 bankruptcy may help you obtain affordable payments under a court-approved repayment
plan that lasts 3 to 5 years.
Back income taxes are often an issue on their own. Getting them discharged
may be possible when meeting qualifications or a repayment plan approved
by the court could help manage payments. A lawsuit or judgment may lead
to garnishment of wages or bank funds. Bankruptcy may stop collection
efforts in this situation. In the end, you'll want to compare the
types of debt you have and learn if bankruptcy can help minimize or eliminate
obligations in the best way possible.