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Filing for Chapter 13 Bankruptcy and Cannot Afford It?

Filing for Chapter 13 Bankruptcy and Cannot Afford It?
"Oftentimes, deciding that bankruptcy is the only route out of financial difficulties can alleviate the stress associated with debt. After deciding to apply for bankruptcy, you must also choose whether to file under Chapter 7 or Chapter 13. If you file for Chapter 13 bankruptcy, you will be required to make monthly payments to the bankruptcy trustee, who will then distribute the funds according to the court-approved payment plan. Most people use Chapter 13 to stop a foreclosure and save their home, or if they have numerous nonexempt assets that they may lose if they file for Chapter 7 bankruptcy. When you agree to a chapter 13 payment plan, everything initially sounds manageable. Changes in circumstances can make it difficult to make chapter 13 payments. Not making payments is not an option unless you want your bankruptcy discharged. If your income fluctuates and you are struggling to keep up, you have no choice but to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy.11 U.S.C. 1307 allows you to convert your bankruptcy to Chapter 7 at any time if you qualify. There is a possibility that you will lose some of the assets you were attempting to protect in the Chapter 13 filing if you convert to Chapter 7. If you own assets that qualify for protection under a bankruptcy exemption law, you may be required to turn them over to the bankruptcy trustee for sale. When converting from Chapter 13 to Chapter 7, if you fall behind on your mortgage payments, the lender will submit a motion for relief of stay with the bankruptcy court to allow them to foreclose on the property unless you remain current. This also applies to vehicle financing. Since the discharge of debt is the ultimate objective of a bankruptcy filing, a debtor should consider the pros and cons of converting to Chapter 7 before deciding whether to renegotiate the Chapter 13 bankruptcy payment plan. A bankruptcy attorney would be an invaluable asset in assisting with this decision.Depending on the amount of unsecured debts a person has, converting to Chapter 7 bankruptcy has a number of advantages. Any bills incurred during a Chapter 13 bankruptcy would be in addition to the Chapter 13 plan, but after converting to a Chapter 7 bankruptcy, any bills incurred up until the date of discharge can be added and wiped out. This would be useful if the person filing for bankruptcy became unwell and had a significant medical bill. This could be included in the Chapter 7 bankruptcy schedules and discharged at the conclusion of the filing.If you believe that your Chapter 13 bankruptcy is failing, converting it to a Chapter 7 filing may be your best and only option. Before taking any action, consult your bankruptcy attorney and discuss your options. Filing for bankruptcy is a potent tool, but if not used to the full extent of the law, it can be a waste of time for the debtor.
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"Filing for Chapter 13 Bankruptcy and Cannot Afford It?" was written by Mary under the Finance / Wealth category. It has been read 200 times and generated 1 comments. The article was created on and updated on 01 June 2023.
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