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What is the process like in a Chapter 13 bankruptcy filing

Deciding to declare bankruptcy is never an easy choice. There are many factors to keep in mind when trying to figure out what to do about your overwhelming financial obligations. One of the most significant factors in bankruptcy is whether you can keep your home.

Chapter 13 bankruptcy may allow you to keep your home and vehicle, even if you are behind on payments. It is essential to understand some aspects of this particular type of bankruptcy before deciding to move forward.

The difference in bankruptcy types

There are two types of bankruptcy individuals can declare: Chapter 7 and Chapter 13. Chapter 7 requires no income requirement; however, it may lead to liquidation proceedings including your home and vehicles. Chapter 13 is more of an income and debt restructuring::

  • You can catch up on late home and vehicle payments and keep them
  • Debt restructuring and repayment plans range from three to five years
  • Debtors will cease calling immediately upon receiving notice

Successful bankruptcy proceedings

Throughout the time established in the Chapter 13 bankruptcy proceedings, the debtor must make the scheduled payments to creditors. One of the best ways to ensure timely payments is through payroll deductions. Moving through the process is often best accomplished in this way as it guarantees on-time payments.

After the bankruptcy

At the end of the pre-set time, payments to creditors should be complete. With payment plans satisfied at the conclusion of the bankruptcy period, the court may grant the debtor a discharge. Through a discharge, creditors may no longer pursue any outstanding amount of debts with few exceptions legally. Debtors cannot collect any amount due beyond payments made during the bankruptcy.

Bankruptcy is not a decision you should take lightly. However, in some cases restructuring debt payments and allowing time to catch up on some secured debts may be your best option.

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