Chapter 13 Bankruptcy Explained
If you are facing financial difficulty and wish to file for bankruptcy, then you could file under either chapter 7 or chapter 13.
However, consumers are now required to pass a ‘means test’ in order to qualify for filing under chapter 7.
The new bankruptcy laws make it more imperative than ever for consumers to seek the services of a competent, knowledgeable bankruptcy attorney.
What Is Chapter 13 Bankruptcy?
If you are earning a decent income but have taken out a mortgage that is proving to be too large for you to handle financially, then filing for bankruptcy under Chapter 13 is a good option.
Filing under this chapter will help you save your assets from falling into your creditor’s hands.
Your bankruptcy attorney can help you to draft a repayment plan. This plan, which is usually drawn out over a period of 3 to 5 years, will then be presented to your creditors.
The court will appoint a trustee to manage your repayment schedule, and the trustee will collect the installments and pass payments on to your creditors.
Under Chapter 13 bankruptcy, you can work out a new repayment schedule with your creditors. This will put less stress on you financially, and will also satisfy your creditors about your seriousness to repay.
Any debts left over after the repayment period are discharged. Some debts, such as alimony, child support, student loans and some taxes cannot be discharged.
One of our knowledgeable bankruptcy attorneys will analyze your case and get back to you right away.
The Advantages of Filing Chapter 13 Bankruptcy
Once you file for bankruptcy under Chapter 13, your creditors will no longer be able to contact you at your home or office in an effort to collect. You get an ‘automatic stay’ from your creditors – this is the law.
Once your repayment schedule is approved by the bankruptcy court, you will continue to remain in control of your finances - and your life. You will now be able to repay your debt in a much more organized manner.
You will, however need to maintain the rescheduled payments; otherwise, your creditors will still be able to go after your assets if you have taken out a secured loan (i.e. a loan where you have submitted collateral such as your home or car).
The bankruptcy will stay on your credit record for a period of 10 years. However, in all likelihood, you will be able to get a new credit card – and probably even a mortgage - after just a few years.
If you don’t mind paying installments for 3 to 5 years in order to safeguard your assets, then filing for bankruptcy under Chapter 13 is a good option.