Chapter Seven Bankruptcy: An Overview
Chapter 13 bankruptcy is more of a repayment plan than anything else. Unlike other forms of bankruptcy in which your assets are sold to repay what debt can be repaid even if its only pennies on the dollar- this type of bankruptcy saves your assets. Sometimes when you are pushed to the point where you need to declare bankruptcy it is because you are over your head and drowning in debt with no expectations to be able to get ahead of the rapidly growing debt.
This can happen,
as it has to a lot of people, because of the current economic recession. Good paying jobs disappear and the main or only breadwinner in the family suddenly can’t afford the lifestyle that they are accustomed to anymore. Car payments, credit card debt and mortgages can rapidly snowball after only a few months of not being able to make toppled by high interest rates and fees. The end result is often taking that credit hit to declare bankruptcy because there is no way to work your way out of the debt.
Chapter thirteen however is different. The assumption with this type of bankruptcy is your situation, which kept you from paying your bills is now resolved and with some sort of repayment plan in place you can once again resume your payments.
Because this is not erasing your debt or selling your assets it can be a trickier type of bankruptcy to work with. It is vital for any bankruptcy that you have a qualified bankruptcy attorney to help you but it is even more important in this type of filing. A bankruptcy attorney can explain if this is the right type of bankruptcy for you or not. If your current economic situation is not stable you may end up rapidly backsliding on your payments and as your bankruptcy attorney can explain to you, even one missed payment is grounds for the court to dismiss the entire payment plan. At that point you would be faced with declaring chapter seven and losing most if not all of your assets.
You should also be aware that this type of bankruptcy even though you are assuming the debt and keeping the assets will still have a negative effect on your credit score. Most likely if you are able to stay afloat and get your debt back under control you won’t be to anxious to incur any more debt so the hit won’t be to terribly felt by you as you recover. However, your bankruptcy attorney can explain to you in better details how much of a future impact this type of discharge will ultimately have on your credit and life.
Once you schedule a consultation with a bankruptcy attorney be sure to bring a listing of all of your debts and all of your assets including proof of your current income. Your lawyer can easily help you understand if you meet the criteria to be filing under chapter 13 or not with this information.
