In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property.
The reason: its long-term negative impact on your creditworthiness. The consequences of bankruptcy are significant and require careful consideration.Bankruptcy information (both the date of your filing and the later date of discharge) stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live. By using the protection and assistance provided by federal law. ” You’ll find out later that such phrases often involve filing for bankruptcy relief, which can hurt your credit and cost you attorneys’ fees. Other factors to think about: Effective October 2005, Congress made sweeping changes to the bankruptcy laws.You now must wait eight years after receiving a discharge in Chapter 7 before you can file again under that chapter.The Chapter 13 waiting period is much shorter and can be as little as two years between filings.The Federal Trade Commission (FTC) cautions consumers to read between the lines when faced with ads in newspapers, magazines, or even telephone directories that say: “Consolidate your bills into one monthly payment without borrowing.” “STOP credit harassment, foreclosures, repossessions, tax levies, and garnishments.” “Keep Your Property.” “Wipe out your debts! If you’re having trouble paying your bills, consider these possibilities before considering filing for bankruptcy: If none of these options is possible, bankruptcy may be the likely alternative. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Chapter 13 allows you, if you have a steady income, to keep property, such as a mortgaged house or car, that you might otherwise lose.Another major change to the bankruptcy laws involves certain hurdles that you must clear before even filing for bankruptcy, no matter what the chapter. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. Read more on dealing with debt from the FTC or contact the AFSA’s Education Foundation at 1-888-400-2233 for more credit and money management information.You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. The amount varies by state and is publicized by the U. Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities.Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary by state.The advantage to this method is you’re not taking on a new loan.