Many individuals consider bankruptcy court to be the last stop on the road to financial disaster; the only option left when returning debts becomes unattainable. Even during bankruptcy, there is hope, and Chapter 13 of the united states bankruptcy statute provides the closest thing to a gentle landing.
For valid reasons, Chapter 13 is often known as the Wage Earner’s Insolvency. Chapter 13 is for those making money but have gotten behind on repayments for items purchased on credit.
Your debts are restructured, and a payment plan is established. As long as you follow the terms of Chapter 13, it would help if you were allowed to keep your house.
Under chapter 13 bankruptcy Chino, you may have 3-5 years to pay off your obligations while devoting all your discretionary income to debt repayment. That implies simple living, but the Chapter 13 option allows you to erase the unsecured debt, such as credit card bills, while catching up on home payments.
You’ll also be monitored by a court-appointed trustee who might accept and disburse your payments.
How Chapter 13 Functions
It would help if you drafted a reorganization plan that protects specific assets (such as your home) against seizure or bankruptcy and often asks for debt forgiveness.
This is in contrast to the more severe Chapter 7 petition, which goes bankrupt non-exempt assets.
No bankruptcy petition, whether Chapter 13, 7, or 11, discharges all obligations. Child maintenance and alimony allowances are not dischargeable, nor are they refundable.
However, bankruptcy can discharge many other obligations, though it will most certainly make future borrowing more difficult.
To be eligible for Chapter 13, you should:
Have a consistent source of income.
You have not filed a Chapter 13 insolvency or a Chapter 7 bankruptcy for the past two years.
Keep your tax filings up to date.
Your unsecured debt cannot exceed $419,275, and your secured debt cannot exceed $1,257,850.
These numbers are updated regularly to incorporate changes in the consumer price index.
Submitting a Chapter 13 petition puts outstanding foreclosures and other loan repayments on hold. This provides temporary debt relief while the court reviews the plan but does not remove the loan. Perhaps, the bankruptcy strategy would release enough funds.
The Benefits of Chapter 13
Essentially, Chapter 13 gives you time to have your finances in order. It increases your time following the bankruptcy court’s order to settle what you owe.
If the bankruptcy agreement requires you to pay back the amount, Chapter 13 secures your loan cosigners from collection methods. If you ever need to declare a second bankruptcy, Chapter 13 has a two-year waiting time, but Chapter 7 has an eight-year waiting time.
It is also necessary to file a Chapter 13 insolvency after completing a Chapter 7, permitting you to obtain a reduction in any debts that remains after a Chapter 7 clearance.