When Should You Consider Before Filing Chapter 13 Bankruptcy?

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When Should You Consider Before Filing Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a good option for those who are in search of debt relief but one should consider it only under certain stipulations.

Those who are in need of debt relief can consider chapter 13 bankruptcy. But a debtor should be aware of few things and should be cautious before he files for chapter 13 bankruptcy. He should also know the major difference between chapter 7 bankruptcy and chapter 13 bankruptcy. Bankruptcyonly provides excellent services for filing both the bankruptcy and even helps to clear the doubts.

First of all a debtor should know that filing bankruptcy is not a small thing and there are great difference between chapter 13 and chapter 7 bankruptcy. If a debtor file chapter 7 bankruptcy than his major debts would be discharged. A debtor can easily get a fresh financial start after filing chapter 7 bankruptcy.

Chapter 13 bankruptcy rules are very different from chapter 7. It usually takes three to five years to finalize chapter 13 bankruptcy and the debtor is set in payment plan for three to five years. Here the debtor has to pay the decided amount to their creditors every month. Later discharge is given after completing the payments.

There are pros and cons of everything and same is the case with chapter 13 bankruptcy. In this type of bankruptcy, the completion rate is very low. Many people don’t succeed in filing this bankruptcy thus there are chapter 13 bankruptcy eligibility and one should file it only under the following situations:

If a person is behind on his mortgage payment and he wants to stay in his house than he can file chapter 13 bankruptcy.
Whenever a person is not eligible for a loan modification than he usually files bankruptcy.
One cannot file chapter 7 bankruptcy if he earns too much because one cannot declare chapter 7 if he is below the median income and in that case, he has to file chapter 13 bankruptcy.
When a person wants to keep non-exempt assets than he filing chapter 7 bankruptcy is not a good option. File Chapter 7 bankruptcy permits one to keep his personal property but there are limitations. If a person wants to keep his sedan or Rolls Royce then he should file chapter 13 bankruptcy.

Thus one should file chapter 13 bankruptcy only under the above stipulations. One has to provide all personal bankruptcy information to his lawyer to file bankruptcy. Even if one wishes to keep few assets than he can do it buying it from the trustee and this is possible only in chapter 13 bankruptcy case.

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