The Ins and Outs of Chapter 13 Bankruptcy and Foreclosure


There are many rules associated with bankruptcy, as you more than likely already know, and there are six basic types of bankruptcies set under the Federal Rules of Bankruptcy Code. There are some that result in a discharge of all debts, but Chapter 13 Bankruptcy is not one of them. Instead, this is simply for people who need to catch up.

There are many factors in life that could lead to serious financial problems, as you are probably well aware. For instance one could find themselves needing to take some time to pay off their debts. There could have been a job loss, a medical emergency, or perhaps a natural disaster. Either way, everyone should be given a chance to return to the quality of life that they once had, no matter what it takes.

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In all bankruptcy filings, it should be noted that both individuals and married couples will be required to go through credit counseling before they can actually file for bankruptcy. This counseling is to help the debtor keep their debts under control after filing for bankruptcy. Too bad they don't have people learn this in school while they are growing up. Preventative measures would certainly be a great alternative to actually filing bankruptcy. After all, no one actually wants to have a bankruptcy filing on their credit report.

A Chapter 13 Bankruptcy will require the debtor to submit a document, called a feasible repayment plan to the court when filing the bankruptcy petition. Along with bankruptcy petition, the debtor is required to submit a matrix. The matrix will contain the list of all creditors and addresses. The bankruptcy court will then send out notifications to all the creditors of the impending bankruptcy filing of the debtor. This is all part of the process that will serve to show the court and creditors just how the debtor plans to get their life in order, and ultimately repay the creditors part or all of their debt over the 3 -5 year payment plan.

One of the largest benefits of filing Chapter 13 Bankruptcy may very well be stopping foreclosure. In other words, any property or housing that you currently own may be repossessed or foreclosed on due to non-payment on the mortgage or loan. Once this process begins you will either need to find a way to make your payments quickly, or you would be forced to give up the property. Not with Chapter 13. Once the bankruptcy is filed an automatic stay is put in place by the court stopping all collection and legal actions against the debtor. This includes foreclosure. When it comes to protecting property Chapter 13 bankruptcy is king.

With a Chapter 13 bankruptcy there are plenty of options for renegotiation or even debt consolidation that can keep you on your feet so long as you can keep up with the payments. Failure to keep up your plan payments will result in a dismissal of the bankruptcy. If for some reason the debtor is having trouble keeping up they can contact their bankruptcy attorney to modify the Chapter 13 plan. As you can see, there is plenty to learn and many options when it comes to Chapter 13 Bankruptcy. Use the power of Chapter 13 along with the help of your bankruptcy attorney to protect your family's future.


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