If you’re asking yourself, “What is chapter 13 bankruptcy?” you’ve come to the right place. Chapter 13 bankruptcy is a repayment plan that can help you eliminate your debt. You will probably be paying creditors a fraction of what you owe them, but you can start rebuilding your credit faster. Chapter 13 bankruptcy can help you get your finances back on track faster. You can apply for new credit as soon as you’re discharged, but you should make sure to use it responsibly and pay off the balance at the end of every month.
This type of bankruptcy is different from other types of bankruptcy. Unlike a traditional bankruptcy, Chapter 13 bankruptcy does not involve selling your property. Instead, you pay your creditors through a repayment plan lasting from 36 to 60 months. During this time, your property stays safe from creditors, but you must pay the mortgage and equity loan on your home on time each month. Your trustee will also want copies of your tax returns every year. During the repayment period, he’ll apply 50% of your net tax refund to your debt. If you’re over the median income, however, you can keep the entire tax refund.
Another major benefit to Chapter 13 bankruptcy is that it can stay on your credit report for up to seven years. While the negative impact of bankruptcy will diminish with time, it can still be a big obstacle if you’re looking for a conventional mortgage. Depending on your personal financial situation, Chapter 7 or Chapter 13 may be the best option. They both have different results and goals. Choose one based on your situation. What’s important to know is that both types of bankruptcy will affect your credit rating.
When considering filing for Chapter 13, remember that you’ll need to decide what debts you can afford to repay. Chapter 7 bankruptcy requires you to pay your secured debt in full, while Chapter 13 will allow you to pay less than you owe. A Chapter 13 bankruptcy plan may still allow you to access loans. For those who want to keep their property, Chapter 13 may be the better option. If you’re already delinquent on your mortgage or car payments, Chapter 13 bankruptcy may help you catch up.
While Chapter 7 is a liquidation option, a chapter 13 plan allows debtors to repay their debts over three to five years. With a chapter 13 plan, your creditors are required to accept the repayment plan as part of the agreement. The repayment plan can be for three to five years, and the debtor can keep his or her home, car, and other assets. The repayment plan is set up in such a way that your creditors will be unable to collect their debts.
When filing for Chapter 13 bankruptcy, your creditors will be informed by the trustee or attorney that you’ve chosen to file for this bankruptcy. They will then evaluate your financial situation and notify your creditors about your bankruptcy. If your creditors agree, they will stop collecting on their debts. You will need to submit a list of your creditors and the trustee or clerk will contact them on your behalf. If you’re unable to meet your payments, you may not be able to pay your creditors in full, but you can still pay off the rest of your debts.