Chapter 13 bankruptcy is one of two common
forms of bankruptcy.
In this case, the person filing bankruptcy creates a plan
for repaying those owed money. The biggest reason people choose
chapter 13 over chapter 7 is that
you can typically save at least some possessions – including
your home – from repossession by the creditors. In most
cases, the Chapter 13 bankruptcy plan resembles a debt
consolidation loan.
Some important points about chapter 13 are:
- Cosigners are usually protected. This means your parent
won’t be penalized because he or she cosigned to help
you get a particular loan.
- Self-employment doesn’t preclude you from filing
chapter 13.
- You probably aren’t eligible if you’ve ignored
or failed to comply with previous court orders regarding
your debts.
- Though the court can stop the collection attempts, it’s
usually only for the short-term. You could still be required
to deal directly with your creditors, unlike the provisions
of chapter 7.
- Married couples may file jointly but the property may
not be divided, even if only one is filing for bankruptcy.
That means your spouse’s income will be considered,
even if the two of you have kept separate checking accounts
and debts.
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