What Is Life Like After Chapter 13 Bankruptcy? Credit After Bankruptcy. Bankruptcy of any kind, including Chapter 13, is devastating for your credit. Once you've filed Freedom From Payments. The best part about life after a Chapter 13 is that you're likely to have extra money in your Lifestyle. If, however, you obtained a Chapter 13 discharge in good faith after paying at least 70 percent of your unsecured debts, the six-year bar doesn't apply. Declaring bankruptcy under Chapter 13 now will make it harder to declare under Chapter 7 later. Declaring bankruptcy now can get you started sooner on rebuilding your credit. Although, you can only file under Chapter 7 once every six years, you can . The bankruptcy will be on your credit report for seven to 10 years. A Chapter 13 payment plan typically takes between three to five years, so you may struggle with poor credit for several years.
Federal law prohibits those creditors from continuing to pursue you after the discharge of Chapter 13 bankruptcy. As part of your court-ordered repayment program, your state and federal tax refunds were likely seized and applied to pay down your debts. Legal discharge of your Chapter 13 bankruptcy terminates this arrangement, so you will begin receiving tax refunds directly.
You may also apply for new credit cards or other debt instruments without requesting permission from the court. You are still responsible for any outstanding debts that you or the court excluded from the Chapter 13 bankruptcy case. Certain debts are not forgiven through bankruptcy, including child support, alimony, tax debts, court fines and student loans. While you are now free to apply for new credit, this does not guarantee that potential creditors will approve your application. The bankruptcy will be on your credit report for seven to 10 years.
A Chapter 13 payment plan typically takes between three to five years, so you may struggle with poor credit for several years. This article was written by a professional writer, copy edited and fact checked through a multi-point auditing system, in efforts to ensure our readers only receive the best information. To submit your questions or ideas, or to simply learn more, see our about us page: link below. Everyone respects that concern, but it is a fact that bankruptcy cases are public records.
On the other hand, unless you have a reason to look at them, most people will never learn about your case. There are exceptions, however. Many Chapter 13 trustees require that you make your payments through a payroll deduction. The trustee will send a form to your employer setting up that deduction.
If you feel strongly that being on a wage deduction will make things difficult for you at work, you can file a motion asking the court to allow you to pay the trustee directly.
Courts will not allow direct payment unless you can show that you would be in danger of losing your job, being demoted, losing a security clearance or suffering some other serious consequence. Besides your employer, others may learn of your case because of the notices every bankruptcy court must send to creditors.
If your creditors include family or friends, they will get the notice and know of your case. Likewise, the court will send notice of your bankruptcy case to any co-signers on any of your loans or accounts.
In addition to your Chapter 13 payments, you will still have to keep current on your house or car payments if they are not included in the Chapter 13 payment plan , child support and alimony, property taxes, insurance, and other expenses that you may have had difficulty paying in the past. If you got behind on your debt payments because you were out of work or had a decline in income, it may be very difficult for you to begin making those house, car, or child support payments again.
If you get behind on your house or car payments while you are in a Chapter 13 case, the lender can file a motion with the court asking permission to foreclose the home mortgage or repossess the vehicle. If you are behind on your child support or alimony payments when you reach the end of your payment plan, the court will not issue you a discharge.
Bankruptcy Basics. By Carron Armstrong. Reviewed by. Full Bio Follow Linkedin. In contrast, people who file Chapter 13 have the peace of knowing that there is light at the end of the tunnel. The late fees stop. Getting nailed by a late fee is so frustrating. Your money just goes up in smoke. With Chapter 13, the late fees on your credit cards completely stop.
The interest rate on your car note is lowered. I see rates this high in the Rome, Cartersville and Dallas areas as well. Many people pay back more in interest than the purchase price for the car!
With Chapter 13, we can lower the interest to around six percent in most cases. How much does it cost to file? How do I Stop a Garnishment in Georgia? How do I Stop a Foreclosure in Georgia? What do I need to bring to my first meeting?