Individual Bankruptcy - Chapter 13 (Wage Earner)
Under Chapter 13, the debtor proposes a plan to pay his creditors over a three to five-year period. This written plan details all of the transactions (and their durations) that will occur. Repayment according to the plan must begin within thirty to forty-five days after the case has started.
During this period, the creditors cannot attempt to collect on the individual's previously incurred debt except through the bankruptcy court. In general, the individual gets to keep their property, and the creditors end up with less money than they would without continued interest. This process allows the debtor to pay the amount owed without losing their assets entirely.
Advantages of Filing Under Chapter 13. During the life of the case, the debtor has the ability to: achieve a super discharge of debts not dischargeable under Chapter 7; value collateral; bifurcate the security interest of creditors in certain property; prevent collection activities against non-filing co-signers (co-debtors) and stop foreclosures, although a foreclosure would be reinstated upon completion of the bankruptcy.
Disadvantages of Filing Under Chapter 13. Under the Fair Credit Reporting Act, a Chapter 13 Bankruptcy stays on the individual's credit report for up to 10 years. However, debtors may obtain new debt or credit (credit cards, auto, or consumer loans) after 12-24 months, and can obtain a new mortgage between one and three years later. Note that during the pendency of a Chapter 13 case, the debtor is not permitted to obtain additional credit without the permission of the bankruptcy court. Moreover, creditors may not be willing to risk lending money to such an individual.
If you have any questions, please contact Tony at (347) 464-8277 or [email protected].
During this period, the creditors cannot attempt to collect on the individual's previously incurred debt except through the bankruptcy court. In general, the individual gets to keep their property, and the creditors end up with less money than they would without continued interest. This process allows the debtor to pay the amount owed without losing their assets entirely.
Advantages of Filing Under Chapter 13. During the life of the case, the debtor has the ability to: achieve a super discharge of debts not dischargeable under Chapter 7; value collateral; bifurcate the security interest of creditors in certain property; prevent collection activities against non-filing co-signers (co-debtors) and stop foreclosures, although a foreclosure would be reinstated upon completion of the bankruptcy.
Disadvantages of Filing Under Chapter 13. Under the Fair Credit Reporting Act, a Chapter 13 Bankruptcy stays on the individual's credit report for up to 10 years. However, debtors may obtain new debt or credit (credit cards, auto, or consumer loans) after 12-24 months, and can obtain a new mortgage between one and three years later. Note that during the pendency of a Chapter 13 case, the debtor is not permitted to obtain additional credit without the permission of the bankruptcy court. Moreover, creditors may not be willing to risk lending money to such an individual.
If you have any questions, please contact Tony at (347) 464-8277 or [email protected].