What You Should Know About Chapter 13 Bankruptcy
A chapter 7 bankruptcy and a chapter 13 bankruptcy are very different. Chapter 7 bankruptcies last only a handful of months before it is discharged and you don't have to pay back your debts, but a chapter 13 bankruptcy lasts a few years and you are set up with a payment plan you can afford so you pay back your creditors. In a chapter 13 bankruptcy, the trustee manages your payments and pays your creditors back for you with payments you make each month.
Although both bankruptcies differ, the one thing they share is that neither should be taken lightly. Filing for bankruptcy isn't a ticket to financial freedom and it's something you should learn from so you don't have to do it again. If you are considering filing for bankruptcy, read on for everything you should know about a chapter 13 bankruptcy.
You May Not Get To Keep Everything
Just because you are paying back your creditors with a payment plan doesn't mean you get to keep all of your assets. You should list all of your assets that you own with your bankruptcy attorney and with the trustee. You should know that some of these assets may need to be sold in order to pay back your debts. This may mean your car, house, watercraft, or other items worth a lot of money. This is especially true if you aren't able to afford the payments on these items.
You May Have To Give Up Your Tax Check
That hefty tax check you look forward to each year may not be yours to keep this year. You will most likely have to send it along with your tax records to your bankruptcy lawyer, who sends it to the trustee. If your return is a lot of money, it most likely will be kept in order to pay off (or down) some of your debts. This can occur throughout your bankruptcy, so next year's tax check may not be yours to keep either.
You May Have To Use A Credit Counselor
Some bankruptcy trustees will ask that you seek help from a credit counselor to help you better understand budgeting and finances in order to prevent you from filing for bankruptcy again. A lot of people don't understand how to budget and will spend their money before they pay their bills, rather than the other way around. Use the credit counselor and take in everything you are told to help you and prevent you from financial issues in the future.
If you are considering filing for chapter 13 bankruptcy, make an appointment today with a bankruptcy attorney well versed in chapter 13 bankruptcy law. Talk to your attorney about what other things you can expect when you file for bankruptcy.