Chapter 13 Bankruptcy and Chapter 7 Bankruptcy are the two petitions available to individual debtors. While Chapter 7 Bankruptcy allows you to liquidate your assets in order to satisfy your debts, Chapter 13 Bankruptcy is designed to allow you to repay all or a portion of your debts through a repayment plan. Individuals with stable income, unsecured and secured debts, and a large amount of non-exempt property are typically better suited for Chapter 13 Bankruptcy. Continue reading to learn what you can expect after you declare bankruptcy with the federal court.
Halting Collections and Foreclosure Proceedings
Filing for bankruptcy immediately places an automatic stay on all of your accounts. This stay not only notifies your creditors that they must cease all collection activities, but also puts a halt to repossessions and foreclosure proceedings.
Once your request for Chapter 13 Bankruptcy has been approved by the Federal Bankruptcy Court, the amount of your debt repayment plan will be determined based on your regular and disposable income. However, most repayment plans span between three and five years. You will then shortly begin making payments to a Chapter 13 trustee who will disburse the money to your creditors.
Discharge of Debt
You will be released of liability for dischargeable debts once you have completed the terms of your repayment plan. You will also be required to attend money management classes before your liability will be eliminated.
Rebuilding Your Credit
There are several ways in which you can begin rebuilding your credit after filing for Chapter 13 Bankruptcy. These include obtaining a secured credit card, unsecured card, gas credit card, credit union card, or by obtaining secured or unsecured loans.