Chapter 13 bankruptcy allows you to repay your debts over time, with reduced or no interest. It functions as a reorganization of your debts, creating a repayment plan that allows you to pay off creditors with future income. Thus, Chapter 13 is most suitable for those with stable employment who can repay their arrears over a period of five years. In the interim, you get to retain your assets, which may be ideal for families with children who would otherwise be adversely affected by their parents' debt.
During Chapter 13, a written plan specifies the payments to be made over time and the dates on which they will be made. This repayment must commence within a month to 45 days of the court granting the bankruptcy. Chapter 13 can be pursued without the consent of creditors, who are prohibited from attempting to collect the debt by the court.
How does one then file? The first step is determining whether Chapter 13 is the best solution for you at this time. The next stage is to create a budget plan that you are confident you can adhere to until all debts are paid off. After developing a workable plan, you must submit the proper paperwork, pay the filing fee, and attend any required meetings with the judge and creditors.
A debtor is also eligible for a discharge of debts, provided that three conditions are met. The first condition is that all child support and spousal support payments have been made. The second concern is the debtor's prior bankruptcy discharges and how long ago they were granted. The third condition stipulates that the debtor must complete a recognized financial management course.
In the event that a Chapter 13 debtor cannot continue to make payments according to the plan, they may also file for a 'hardship discharge.' This typically occurs only when the circumstances leading to the bankruptcy are beyond the debtor's control and the creditors have received the same amount as they would have in a Chapter 7 liquidation.""
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