Foreclosures are rising daily, as people become less able to keep up with the economic downturn. Many families are at risk every day of losing the houses they worked so hard to make into homes. A little known area of bankruptcy can stop these foreclosures from happening.
A chapter 13 bankruptcy filing is a process that can stop foreclosure proceedings and enable homeowners time to catch up on past mortgage payments. Under a chapter 13 bankruptcy, the process will stop as long as the homeowners can make the current payments while the bankruptcy proceedings are occurring. Chapter 13 can also enable other debts to be rolled into the plan, allowing payments to be made over the course of the agreement.
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Chapter 13 bankruptcy may be considered a type of debt consolidation. Typical repayment plans through chapter 13 bankruptcy last between three to five years. The range is based on income level, not on amount of debt being filed. The process of a chapter 13 bankruptcy can be confusing.
First, the bankruptcy petition is filed&. After the filing, the debtor is issued a stay and all potential legal action from creditors is halted. The plan for repayment is usually filed with the petition, but may be filed up to 2 weeks after the initial filing. A meeting between debtor and creditors are held and a plan for repayment is agreed upon. The case then goes to the bankruptcy court where a judge determines if all parties are satisfied and that the plan is within the bankruptcy code standards. Within one month of the plan being filed, the repayments begin. Once all repayment is complete, the debts are discharged.
The similarities between chapter 13 and traditional chapter 7 bankruptcy lie with the paperwork. There are many forms and documents to be submitted and the process can become quite overwhelming. Married couples must submit both parties information, even if filing alone. A competent and experienced bankruptcy attorney can help the process be less of a hassle. The attorney will instruct the debtor on what forms and information are needed to file and the amount of court costs.
Even though chapter 13 bankruptcy is more of a debt consolidation plan, it will remain listed on the individual's credit history. This will most likely prevent the average citizen from obtaining a personal loan or even a car loan. If the individual is able to obtain a loan, the interest rate will be exceptionally high, but this is a small price to pay for saving a family's residence from foreclosure.
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