Many people worry about filing bankruptcy simply because they do not understand how it works. Bankruptcy is a federal court process which protects debtors from their creditors. Bankruptcy is a great tool to protect your home, car, money and to prevent your creditors from harassing you for payments.

Bankruptcy, depending on the chapter, can either discharge or reorganize your debt. If you are filing a Chapter 7 bankruptcy, your debts will be discharged. Generally, the only debts that cannot be discharged are student loans, child support/alimony payments, some tax debts and debts related to criminal matters.

In a Chapter 13 case, your debts are reorganized by forming a payment plan that will last from three to five years. A Chapter 13 case is a great way to catch up past due mortgage payments. Most payment plans under a Chapter 13 case will include your vehicle payment. Therefore, you will have just one easy monthly payment. While student loans, child support/alimony payments, tax debts and debts related to criminal matter would not be discharged, these could be paid through a Chapter 13 case.

  • Chapter 13 Debt Limits

There is life while you are in a bankruptcy case and after you are discharged from bankruptcy. After a Chapter 7 case – which usually last only 3 – 8 months, you can incur credit right away. Of course, the sooner you incur credit after a bankruptcy, the higher the interest rate will be. If your income qualifies, most people can purchase a home about 2 years after their Chapter 7 case. Debtors filing for Chapter 13 protection can incur credit while they are in the bankruptcy plan provided they obtain court approval. For qualified Chapter 13 debtors, the purchase of a home is possible after they have made 12 months of timely bankruptcy payments.

You will find instant relief by filing a Chapter 7 or Chapter 13 as creditors are not allowed to attempt to collect on their debt as soon as the case is filed. As a result, you will not have to worry about receiving harassing calls from your creditors as they are not allowed to contact you in any way.

The legal info provided on this website should not be construed to be any type of formal legal advice, nor the formation of an attorney-client relationship. Any case results set forth here were dependent on the specific facts of that case and the results will differ from case to case.