For folks seeking credit card debt relief a chapter 13 bankruptcy could possibly be the best and sometimes the only option. But, there are many caveats that all debtors should know before even considering filing a chapter 13 bankruptcy. This information will first, briefly review, the differences between Chapter 7 and 13 bankruptcy and will then get into for you to be suspicious bout filing a Chapter 13 bankruptcy.
A chapter 13 bankruptcy along with a chapter 7 bankruptcy differ greatly. Within Chapter 7 bankruptcy, the debtor won’t have to pay for many his debts. So, absent certain statutory exceptions, once a chapter 7 bankruptcy is filed and licensed by the Bankruptcy Court, the debtor will be able to obtain a fresh financial start on his life.
However, chapter 13 bankruptcies take three to five years to become finalized. With a Chapter 13 bankruptcy you might be set on the repayment plan that lasts less than six years. A repayment plan basically means you make payment for your creditors, a set amount, each month for 3 to years. After the three to five years are finished, you may then be given a discharge for the debts.
One trouble with filing a Chapter 13 Bankruptcy is the completion rate for a chapter 13 plan, is quite low. For instance, during my hometown, Vegas, chapter 13 bankruptcies are just completed approximately 35% of the time.
In conclusion, most people who file a Chapter 13 are doomed to failure. So, the sole time you should file a Chapter 13 bankruptcy is under the following situations:
1. You’re behind in your mortgage, you would like too keep your house and you’re not eligible for that loan modification. A chapter 13 only gives you keep the house. Also, with a Chapter 13 bankruptcy it is possible to strip from the second mortgage. Also, federal loan modification programs only work with owner occupied houses. So, filing Chapter 13 maybe your only chance save investment properties that you could own.
2. You are making money. Under a Chapter 7, BACPA regulations, the debtor is required to pass a method test. The means test states, roughly, you could only declare, a Chapter 7, Bankruptcy, if you are at or below the median salary of the state where you’re filing your bankruptcy. So, if you make money, you almost certainly cannot file a chapter 7 bankruptcy.
3. You would like too keep non-exempt assets. Filing a chapter 7 bankruptcy won’t leave you destitute. The Chapter 7 Bankruptcy allows certain personal property to become exempt from creditors. But, you will find definite limitations. For example, in Nevada, your own car worth approximately $15,000 is exempt from creditors. So, if you wished to keep your custom made muscle car or Most highly regarded a Chapter 7 bankruptcy is probably not the most suitable choice.
In conclusion, it might be advantageous for you to file a chapter 13 bankruptcy. Personally, I might only fie a Chapter 13 bankruptcy if the above scenarios were present. Also, in order to keep certain assets you maybe capable of buy those assets back from the trustee. So, you may choose to keep your expensive car whilst still being file a chapter 7 bankruptcy. So, at least, only file a chapter 13, after extensive research and once you’ve received legal consultation.