Chapter 13 Bankruptcy Rules
A Chapter 13 Bankruptcy is one of the most common forms of bankruptcy. This helps an individual to adjust their debt if they have a regular income. A person may be allowed to keep all of their property; however, there are many rules and regulations to follow.
How long will a Chapter 13 Bankruptcy stay on an individual’s credit report?
A Chapter 13 Bankruptcy may remain on an individual’s credit report for a period of 7 years from the date when it was discharged or a period of 10 years from the date it was filed.
Under what circumstances would a person be eligible to lower their payments in a Chapter 13 Bankruptcy?
- The person’s income passes the means and median test.
- There is an increase in the person’s basic living expenses due to additions in the family.
- The individual’s disposable income has considerably come down for the past three months due to unexpected expenses or loss in income.
- The person cannot stick to the payment plan that he/she agreed upon due to his/her current income.
- The person’s income has been affected due to an illness, unemployment, divorce or death of a spouse.
- The person has had financial trouble which has affected the possibility of him/her earning more money.
- The person’s auto loan value has lower as per the new rules and regulations.
What happens if a person dies in the middle of a Chapter 13 Bankruptcy?
When a person files for a Chapter 13 Bankruptcy, they enter a 3-5 year plan and agree to make monthly payments to the trustee. If the individual dies in the middle of the bankruptcy, the person’s estate will have to continue with the agreed plan. If, for some reason, this is not possible, the creditors may petition to convert the Bankruptcy to a Chapter 7.
What can a person do if a creditor tries to settle a debt that was dismissed in bankruptcy?
If a creditor tries to settle a debt that was dismissed in bankruptcy, the person may send the creditor a letter informing him/her of such. The individual may give the creditor the state and case number for reference.
Can one use the 403b retirement fund to pay the federal taxes if they have filed for a Chapter 13 Bankruptcy?
This is possible if the person is not employed with the agency that set up the 403b plan.
What are the next steps that a person needs to take after filing for a Chapter 13 Bankruptcy?
After filing, an individual will need to come up with a guaranteed plan to repay the debts and creditors; this will need court approval. Once the court approves the plan, it will be the individuals’ responsibility to stick to the plan and make payments regularly. The payment may either be made directly to the trustee or through payroll deduction. Before getting a new debt ask the trustee as it can affect the ability to repay already existing debts.
Life changes, good or bad, can affect a person’s ability to pay debt they have incurred. Deciding to file for bankruptcy is huge decision and there are many factors, short and long-term to consider. Getting help from Financial Experts on JustAnswer will provide you with affordable and reliable information.