Some people who file for bankruptcy have assets that prevent them from being able to file for Chapter 7 bankruptcy. In some cases, individuals opt for a Chapter 13 bankruptcy so that they can hang on to some assets, which are exempt from the case.
There are many different things that people need to know when they are going to file Chapter 13 bankruptcy. All of these are important because they can impact the suitability of the filing.
A Chapter 13 bankruptcy is known as a working man's bankruptcy because the person must pay the bankruptcy trustee payments according to an approved schedule. The payment plan lasts for three to five years, depending on the specifics of the case.
Once you make the final payment and your case is eligible for discharge, any debts that remain unpaid are dismissed. You won't be responsible for them. There are exceptions to this, such as your mortgage.
One significant benefit of filing for bankruptcy is the automatic stay. This is issued by the court and prevents creditors from being able to contact you about debts. You won't have to worry about answering the phone or checking the mail because these types of collections are forbidden.
There is a chance that a Chapter 13 bankruptcy will stop a foreclosure. You will have to work with your lender to come up with a payment plan that will let you get your mortgage current and keep it up to date throughout the bankruptcy process.
There are a few things that you will have to do when you file for bankruptcy. You have to go through credit counseling in order to file for Chapter 13. You will likely create a repayment plan that you must submit to the court.
Other conditions of filing
When you file Chapter 13 bankruptcy, you have to agree to avoid taking on new debt unless you have the trustee's approval. This means that you wouldn't be able to get new credit cards or try to get a new vehicle loan without permission.
It is imperative that you stick to the plan when you are in the midst of a Chapter 13 bankruptcy. Failing to make the required payments or take care of anything else that is ordered by the court can mean that your petition for bankruptcy is declined.