Chapter 13 Bankruptcy

Chapter 13 Bankruptcy

Chapter 13 bankruptcy requires the reorganization / consolidation of all of the filers debts into one amount that’s repaid over a span of three to five years. People filing under Chapter 13 don’t have to pass a means test, however they do have to prove about the bankruptcy court which they have an income with which to make normal payments on their debt.

Chapter 13 is quite capable of helping filers get a fresh financial start while having the ability to maintain valuable assets such as houses and cars without seeking exemptions. There is not the immediate discharge of debt just like there is in Chapter 7 bankruptcy, but in the event the debtor fulfills the obligations of this repayment program, remaining debt is discharged in the end of their time.

Filing for bankruptcy protection activates something called an”automatic stay.” Meaning that although the filing is pending, creditors cannot pursue suits, garnishments, repossessions or even foreclosures. Actually, they can’t even get into the debtor while the automatic stay is in place – all harassing phone calls and threatening letters need to stop once the filing process has started. Past due amounts on car or mortgage payments can be rolled into the consolidated debt and paid back within the life of the repayment program, so provided that the debtor remains current.

In addition to the protections offered by the automatic stay, Chapter 13 can be a relatively inexpensive method to get a fresh financial start. Yes, filers must commit to making payments on their debts for a time period, and the bankruptcy will have a long-lasting effect on their credit score, but they can also start to rebuild credit long after filing. What’s more, the negative effect of a bankruptcy filing is still less significant compared to that resulting from a foreclosure, repossession or garnishment.

If you want to learn more about filing for Chapter 13 consumer bankruptcy, contact The Stallings Law Firm today.

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