Filing for Chapter 13 or Chapter 7 is a last resort for those who are in debt over their head. Chapter 13 requires a payment plan in which you pay off all or part of your debt. Chapter 7 gives you a fresh start and you are requied to rebuild your credit rating from scratch. In either case the burden of debt and legal action will be eased, but both have consequences that are important to understand prior to filing. Either Chapter 7 or Chapter 13 are lengthy commitments. You are committing to paying off or removing your debt and solving a problem, but on the other hand, you are also committing to several years of being viewed as a major credit risk. This means different things for individuals, but be sure to understand the consequences before filing. Cincinnati bankruptcy attorneys will help you understand your filing rights and obligations before you reach a Cincinnati bankruptcy court. If you are considering a Chapter 13 or Chapter 7 filing, be sure you speak with your attorney considering all of the filing.

You need to understand what, if anything, will change your taxes, should you choose to file. If you receive refunds at the end of the year, you may have to forfeit this. It is considered disposable income and you may end up losing 50% to 100% of the return. However, there are ways you can protect this money. Some choose to claim higher withholdings throughout the year. This gives you additional income through the year and creates a situation where there is no annual refund to garnish. However, be sure to increase the withholdings without creating risk of taxes being due in April.

You can also protect your refund by placing the money into a retirement account throughout the year. While you will have less access to your monthly income, but keeps the funds safe from creditors. This also helps you plan financially for the future and it gives you something to look forward to following your debt release.

Filing Chapter 13 and Chapter 7 will affect your ability to get credit in the future. For up to a decade you may find yourself unable to get loans for vehicles or mortgages, and you may be denied unsecured credit like credit cards. It may also be difficult for you to find employment, to open a checking or savings account, or to gain certain clearances affiliated with employment. If you plan to marry, your prospective spouse can be affected not by being held liable, but having their options reduced when it comes to owning a home or getting a fair interest rate on loans. They will be taking on some of the consequences of your filing, so keep that in mind if you are considering this option.