Because they have the willingness to repay their debts, individuals are more likely to choose chapter 13 over chapter 7 bankruptcy. Additionally, being bankrupt does not preclude you from making up for delayed payments. In fact, you can reinstate an original agreement on your auto loan or mortgage in order to make up for late payments.
If the debtor has received a discharge under Chapter 7, 11, or 12 more than four years ago, or if the debtor has received a discharge under Chapter 13 more than two years ago, then the debtor is eligible to file for chapter 13 bankruptcy. In addition, you have an outstanding tax obligation. For instance, if the majority of your obligations stem from federal taxes, this will further determine the type of bankruptcy under which you will fall.
The purpose of chapter 13 bankruptcy is to help individuals find a balance between facing their financial difficulties and finding a way to repay their debts. Typically, it takes between 36 and 60 months to complete the repayment plan. In this manner, secured creditors are prioritized to be paid first, with the bankruptcy court's initial assistance and reminder. There are also petitioners for bankruptcy who will maintain the current payments and make monthly payments to pay off the past-due balances.
One of the greatest advantages of filing for chapter 13 bankruptcy is that all payments are made according to a schedule. There will be penalties if you fail to comply with the schedule. Also, it remains conceivable that the remaining unsecured debt at the conclusion of the plan may be discharged. Before you register for chapter 13 bankruptcy, you must be aware of the following information.
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