Common Questions
about Chapter 13 Bankruptcy
King and King Bankruptcy Attorneys 11/14/12
Managing money isn't always easy, and some people need more
than one chance to get it right. If you’re living a lifestyle with a few
comforts you don’t want to give up, or make more money than what income limits
allow for filing Chapter 7 bankruptcy, you might be considering the possibility
of Chapter 13 bankruptcy in order to give you a new start and help you get a
handle on your finances.
What’s the difference
between debt consolidation and Chapter 13?
At first glance, Chapter 13 bankruptcy can sound a lot like
non-bankruptcy debt consolidation. The two are similar but have several key
differences. With a Chapter 13 bankruptcy, creditors are court-ordered to
comply with the terms of the debt settlement, while they have the option of
declining under a standard debt consolidation plan. Also, with Chapter 13, the
interest on certain types of debts stops accruing, so you can pay off what you
owe without chasing down interest. A Chapter
13 has an “automatic stay” which prevents creditors from attempting to collect
a debt outside of the bankruptcy process.
Debt consolidation has no such protection.
Will I lose my assets
or investments when I file Chapter 13?
Protecting assets and investments is one of the reasons why
many people choose to file Chapter 13. Speak
with a qualified bankruptcy attorney to learn more about what assets you can
protect in your bankruptcy.
Is Chapter 13 mainly
for those who don’t meet Chapter 7 Guidelines?
While it is common for the Chapter 13 option to be presented
to those who don’t pass the “means test” required for Chapter 7, there are many
cases when even those with lower or moderate incomes may prefer Chapter 13 over
Chapter 7. Chapter 13 is a convenient
reorganization of all of a debtor’s debts.
Also, many debtors can take advantage of “cram down” in Chapter 13,
where interest rates and total amounts owed to certain creditors can be
drastically reduced.
Getting New Credit
When you file a Chapter 13 bankruptcy, your income levels
are assessed to determine how much you can affordably pay towards your debts.
For this reason, it is rare that new debt can be incurred during the 3-5 year
repayment period. Any new credit you might get not only needs to be approved by
the potential creditor, but also by Bankruptcy Court. Getting new credit is rare
but possible during a Chapter 13 bankruptcy.
Every bankruptcy plan handled by King and King is customized
for each individual case to obtain the very best results possible. Contact us at 404-524-6400 for a free
consultation today.
