Determining Bankruptcy Debt Priorities
When it comes to bankruptcy debt unfortunately, it is important that one should remember that some are more important than others. In this article, we look at some of the essential debts, which will need to be paid first to your creditors. Certainly if you choose to ignore these then the consequences could be very serious.
The most essential bankruptcy debt that one should ensure that you make is the payment for your mortgage or rent. This should be the most important payment and top of any debt list to ensure that you and your family have a roof over your heads at all times. But if you think that actually making these payments is going to be difficult then you need to seriously think about selling up or renting a property that is better priced.
If you are thinking of selling your home then you very carefully need to weigh up the advantages and disadvantages of doing so before you actually place the house on the market. You may actually find that rather than selling up immediately and waiting another six months to a year, the value of your property may well go up. This could then lead to you have a small surplus of additional cash, which you can then use to pay off the more important creditors.
Other debts that need to be placed high on the list of those that should be paid are those for your heating, electricity, water and telephone. Without these, life will become extremely difficult and in some cases can be very unsafe as well.
If you are someone who has a car that has been purchased using a loan then you will need to make sure that you keep up the payments on this. However, if you find that this proves to be somewhat difficult it might be an idea to sell the vehicle and use any cash left over from the sale (after paying off your creditors) to purchase something a little cheaper. But if you find that by selling there will not be enough funds available to buy another car then it might be advisable to return the vehicle to the dealer and avoid getting it repossessed instead.
When it comes to what debts need to be paid when a person is declared bankrupt then the IRS will want payment for any unpaid taxes that you have. If you would like to avoid them taking the funds directly from your paycheck, bank account or through repossession of your home then speak to them immediately. Doing this you should then be able to negotiate a repayment plan in order that you can settle the sum that is outstanding.
It is important that you do arrange to make the payments on all your essential debts before you start thinking about the nonessential ones. Just because you owe a few dollars on your hardware store bill, do not go and pay this because they are hassling you. Instead, it is more crucial that you pay your mortgage or rent and utility bills to ensure that you are safe and secure. Then if you have any funds available, allow a small payment to be made to the nonessential creditors to keep them happy.
Above we have looked at what types of bankruptcy debts a person will need to pay after being declared bankrupt to prevent their situation from becoming any worse. In a large number of cases after filing for bankruptcy with the courts, they will arrange for a financial advisor to assist the person to ensure that such debts are paid.
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