Why would anyone file for Chapter 13???

Question

Can you still buy a house?
What purpose in filing does this serve?

Answer 1

A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." (1) If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

See http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

Answer 2

A chapter 13 allows you to schedule a payment plan to pay your debts because you could not pay them as it was for what ever cause. It halts all foreclosure or other collections of bad debt. Unless things changed last fall when reform took place, all interest stops accruing, the payments are for principal only, and you keep all your assets.

Under certain circumstances you can buy a house while under the program with the court's approval. You need to make all payments as ordered and agreed to, or you will be in contempt of court and have to answer to the judge. Further, creditors may force a sale of your assets if you fail to keep up the payments timely.

Key to recovery is to make your payments on time and pay the balances in full. You have ended up here for a reason, take a class in finances and learn to manage and live and die by a budget. Plus, if you have kids they will learn finances from you- surely you do not want them to have your problems later on as theirs. Unless you change they will; they will do what they see you do.

Bankruptcy laws changed last fall, you need an attorney to review the process with you, go the 13 if possible and learn to handle finances. That way you'll lessen greatly your opportunity of being there again.

Any bankruptcy will be on your record for several yrs but a 13 is easier to overcome than a 7.

Answer 3

Bankruptcy shows on your credit report for sometime, but after 7 years you should have no problem with it any more. I even know people who were able to buy a house 3 years after filing.

It does stop the calls. It does get your debt reduced. You take a hit on your credit report for a do-over, as it were.

Peace!

Answer 4

ironic how it is Chapter "13"
the Friday "13"