Unsecured Debt and Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a court-approved payment plan to repay debt obligations. It usally spans within 3 to 5 years. Certain debts are required to be paid through this plan. This chapter is commonly filed by people who wants to keep properties such as their home or vehicle while getting caught up on payments.

In Chapter 13, certain debts have higher priority than the others. Secured debt such as mortgage or vehicle loan are included in your repayment plan. Failure to make payments in which you are facing foreclosure or repossession can be remedied by Chapter 13 which allows you to make payments you missed by repaying them overtime. As long as you make these payments according to your plan, you’ll be able to keep your property.

Back child support, spousal support or alimony and back taxes are other debts prioritized in Chapter 13 bankruptcy. When a debt is a priority in bankruptcy, it is required to be paid. In Chapter 13, unsecured debt may not be considered a priority, yet depending on the amount of disposable income you have left over you may be required to place it toward the debt. The amount you have left over after making necessary payments is called disposable income.

The discharge of unsecured debt in Chapter 13 is contingent on the required payments made by a debtor during the repayment plan period. Payments made to unsecured creditors rely on what you can afford rather than the amount of debt owed.

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    Are these Myths causing You to Avoid filing for Bankruptcy?

    A lot of consumers attempt to avoid bankruptcy mainly because of wrong impressions and lack of understanding. While it is true that filing may have its advantages and disadvantages, it still depends on the situation faced by an individual. Thus, it is very important to gather sufficient information that can help you make a reasonable decision about your finances when considering bankruptcy. Learn the facts instead of believing and getting confused by myths that may be misleading.

    1. All debts in Chapter 7 bankruptcy get discharged
    Most unsecured debts are eliminated but certain obligations such as back taxes, student loans, back child support and debt incurred related to fraud are not eligible.

    2. When you file bankruptcy, you lose everything
    Doing your homework on the process will help you learn about exemptions available that protects personal property including your vehicle, home, retirement accounts and more.

    3. Married couples have to file bankruptcy together
    In most cases, a spouse can file on their own especially if the debt is in the name of the filing spouse only. Again, this depends on the circumstances of the situation.

    4. You can’t get back taxes discharged in bankruptcy
    As mentioned in number 1, back taxes are not eligible for discharge in Chapter 7. However, it can be discharged under specific qualifications. When consdering this option, you should seek the advice of a professional or bankruptcy expert.

    5. Bankruptcy can be filed only one time
    This statement is not true. However, consumers must be aware of certain limitations: You can file Chapter 7 bankruptcy again after 8 years, Chapter 13 after 2 years, and you’ll need to wait for 4 years if you are going to a Chapter 13 case from a Chapter 7.

    6. Credit can’t be obtained after filing
    This is not true. Reviewing interest rates of potential lenders is something you’ll want to analyze before inquiring for a credit.

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      Will Settlements Hurt My Credit?

      Debt settlement companies are in the business to make a profit.They can not block the original creditor from suing for payment while the payments are being made to them under the settlement. The consumer can reduce debt using a credit counseling service which is the better choice. These debt settlement companies perform the same service that can be done for free by the consumer which is to negotiate an outstanding balance to an agreed payment amount. Don’t forget a settlement for a reduced dollar amount than actually owed will place a negative credit rating on credit reports.

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        What are Chapter 7 and Chapter 13 Bankruptcy?

        Chapter 7 and Chapter 13 bankruptcy are powerful financial tools that aid debtors recover financial control. Many consumers who look at bankruptcy as an option may not check the differences between the two chapters. Hence, it is significant to comprehend how each chapter works in order to get a clear idea on how filing may be of help to your unique situation. Eventhough bankruptcy has the ability to discharge an outstanding debt, how it is accomplished relies on the chapter filed since the process and qualifications differ.

        Both bankruptcies have the capacity to cease legal collection attempts from creditors with the automatic stay. Once you file, the stay goes into effect and creditors will learn of your filing. As a result, creditors are prohibited from conducting collection attempts for outstanding debt when your petition is filed. However, your debt will be handled depending on the chapter filed.

        Chapter 7 bankruptcy helps debtors achieve a new beginning by wiping out debt. This means that the debt has been discharged with debtors having no obligations to pay the debt. This chapter often has qualifying debt discharged within a year or several months after filing the petition. Debts that may be eligible for elimination are credit card debt, medical bills, personal loans, and other unsecured debt.

        On the other hand, Chapter 13 bankruptcy assists debtors repay debt obligations through a court-approved payment plan. This option is often reviewed by consumers wanting to prevent their home or vehicle from falling behind (in default) on loan payments. It is done by making monthly payments to an assigned trustee who then forwards payment to creditors. This alternative may last between 3 to 5 years but a large number of debtors can repay their debt with affordable payments based on current income. Meaning, you are allowed to pay less than what has been orginally owed depending on the type of creditor.

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          Many business owners are perplexed on whether a personal banckruptcy filing has the capacty to eliminate business-related debt. Well, many cases have proven that it is possible, however, it depends on the type of debt and whether the debtor is indeed personally liable for the debt. Business structure can also influence the ability to obtain a discharge.

          Chapter 7 bankruptcy can discharge common types of business debt such as medical bills, credit card bills, and judgments or lawsuits. Other debt that may also qualify for a discharge are personal loans, promissory notes, and obligations uder contracts or lease agreements completed by a sole proprietor. Other unsecured debt obligations owed by a sole proprietor such as accountant, professional or supplier fees may also be included for discharge. These debts are similar to debt included in a personal Chapter 7 bankruptcy filing.

          Filing bankruptcy for a secured debt (property that is considered collateral) is handled differently. If the secured debt (collateral’s worth) is less than the outstanding balance that you owe, the discrepancy may qualify for a discharge. Bear in mind that the creditor can repossess the collateral if payments are in default.

          How a business is structured may help identify the way a business debt can be discharged. If the debt is owed by the LLC (limited liability corporation) or corporation, the creditor may pursue the business for payment. Thus, the debt may be handled differently.

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                  Link Roundup: The Finer Points of Getting Rid of Your Junk for Profit

                  Dreams of “cashing in” on accumulating “stuff” residing in your residence are mostly that: dreams. There are outlets for objects that you don’t want, but they have hidden downsides. Garage sales: do you really want your neighbors pawing through your past treasures? Pawn shops: is the depressing experience of going there worth it? Trading used merchandise for credit towards something newer? These are mostly schemes to rope in customers who are spending money, not to compensate you for your junk. Best answer: donate your unwanted treasures-turned-junk to charity or to the trash. Free yourself from the illusion that there’s gold in them thar garages.

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