Arizona Bankruptcy Myths Part III

Bankruptcy Myth #7: I must be a US citizen to file for bankruptcy. Also, if I file for bankruptcy I will not be considered for citizenship.

Both of these myths are completely false. First, there is no requirement that you be a US citizen to file for bankruptcy. In reality the only requirement you need to meet in order to file bankruptcy is that you either reside, are domiciled, or have most of your property located in the district where you want to file for the past six months. For most people this requirement is easily met. Basically, if you have lived in one state for the last six months you will qualify. Second,  filing for bankruptcy will not affect your citizenship application whatsoever. Filing for bankruptcy is NOT a Crime. It is a legal right to all who live in the United States, not just a right for citizens.

Bankruptcy Myth #8: I won’t be able to get credit AFTER I file for bankruptcy

Overall, it is difficult to predict how the filing of bankruptcy will actually affect your credit options and credit score. While it is possible that your credit score will go down, filing for bankruptcy is likely to be the only option you have to improve your credit score and credit options in the future. In regards to future credit availability,  some creditors will extend your MORE credit because they may view you as a better credit risk. This is because you are now free of many of your financial obligations and are ineligible to receive another Chapter 7 discharge for either 6 or 8 years.  While creditors will determine your credit worthiness on a case by case basis, most are more concerned with your current income, how much debt you have after filing and whether you have paid your debts on time since filing.

Bankruptcy Myth #9: If I am making my minimum credit card payments and my credit score is decent, I really don’t need to file for bankruptcy.

This really depends on your financial situation. However, in most cases, just because you are making your minimum payments doesn’t mean bankruptcy won’t help you get your finances in order. Unfortunately, if you are just making your minimum payments it is unlikely that you will ever be able to get out from under that mountain of credit card debt you keep paying on every month. Paying the minimum payment every month really just turns you into a financial slave for the credit card companies.

Bankruptcy Myth #10: I can’t discharge my taxes in bankruptcy under any circumstances!

While there are restrictions as to what tax years can be discharged in and Arizona bankruptcy, Income taxes can be discharged if they occur under the following conditions. First, the income taxes you owe must relate to a tax year that is more than three years old. This really means that you can discharge any income taxes in bankruptcy but only those that are for income tax years that a more than three years prior to your bankruptcy filing. For example, ff you file for bankruptcy in 2011, you can discharge all tax years from 2007 and before. However, you cannot discharge taxes from 2008, 2009, and 2010. Second, you must have filed the tax returns more than two years before the bankruptcy filing. Finally, the IRS must have assessed the tax more than 240 days before you file bankruptcy. Although this sounds somewhat complicated an Arizona Bankruptcy Attorney will be able to advise you what amount of income taxes you can discharge.

For more information about bankruptcy contact one of our certified Arizona Bankruptcy Attorneys today.