Dothan, Alabama
111 Adris Place
Dothan, AL 36303
(334) 673-0100

The Tax Implications of Debt Consolidation & Chapter 13 Bankruptcy May 26, 2016

Dothan, Houston
The Tax Implications of Debt Consolidation & Chapter 13 Bankruptcy, Dothan, Alabama

When you're struggling with debts you can't repay, both Chapter 13 bankruptcy and debt consolidation loans may be viable options for reclaiming your financial life. However, there are a wide variety of factors you should consider when choosing between the two, not the least of which are the tax implications. According to Dothan-based bankruptcy attorney Rafael Gil III of The Gil Law Firm, there are some important differences that might have major consequences for your financial future.

Debt Consolidation

Many borrowers initially consider debt consolidation to be a more attractive option because almost all debts can be paid off by the new loan, which may also look better on a credit report. However, the IRS requires credit card and other debt companies to report any forgiven debt, which the government considers as income. When the time comes to file your tax returns, you may find yourself liable for thousands of dollars of taxes on your settled debts.

Chapter 13 Bankruptcy

debt consolidationThe law protects you from paying taxes on debts that are forgiven through bankruptcy, even if all of your unsecured debt is completely discharged. In addition to eliminating much of your debt, a Chapter 13 also allows you to catch up on secured debts without exposing yourself to additional tax liabilities. In fact, a Chapter 13 bankruptcy can also include past-due tax amounts, which debt consolidation may not allow.

Since 2000, Rafael Gil III of The Gil Law Firm has helped Dothan-area families navigate the most difficult legal and financial situations, providing creative solutions tailored to your unique situation. Drawing upon his extensive legal expertise, this experienced attorney offers services in a broad array of practice areas, from Social Security to personal injury cases. Visit the website to learn more, or just call (334) 673-0100 to schedule a consultation today.

Other Announcements, Events and Deals from The Gil Law Firm
How to Talk to the Claims Adjuster After a Car Accident Injury, Dothan, Alabama
If you were hurt in a car accident that wasn't your fault, you may have grounds for a personal injury claim. Since insurance adjusters are trained to find even the smallest reason& more
What’s the Difference Between SSI & SSDI?, Dothan, Alabama
For individuals living with a disability, receiving financial benefits through applicable programs can make all the difference in maintaining a good quality of life. The Social more
What Does a Bankruptcy Trustee Do?, Dothan, Alabama
Individuals who file Chapter 7 or Chapter 13 bankruptcy are expected to cooperate with their assigned trustees. This person oversees and represents the estate in question, so more
What Mental Impairments Qualify for SSDI Benefits?, Dothan, Alabama
The Social Security Administration awards disability insurance benefits to individuals suffering from mental disorders as well as physical disabilities. In both cases, more
How to Build a Strong Slip & Fall Case, Dothan, Alabama
If you were recently involved in a slip-and-fall accident, you might be interested in filing a personal injury claim. The law protects victims in these cases, but before you more