Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Finding a Bankruptcy Alternative and other Debt Consolidation topics.
Unlike Chapter 7 where your debts are completely removed, Chapter 13 involves reorganization of your debts. A proposal outlining your plan for repayment will need to be filed with the bankruptcy court. This proposal may need final approval from the judge and the trustee. If your proposal is accepted, for three to five years your wages will probably be garnished. The courts will determine how much of your debts you will have to pay. Some courts don't require you to pay anything on debts that you are not legally required to pay in full, while others would like for you to pay as much as possible. You may be required to pay several years of interest to compensate your creditors for the fact that that they have to wait several years to be paid in full. If you want to keep all of your assets such as your home or car, you must pay all of your missed payments.
Each state has its own laws on repayment of nonexempt property. Prior to filing for bankruptcy its important to know which debts you cannot walk away from. These debts include: Child support Certain taxes owed Most student loans Debts you do not list on your bankruptcy papers. Traffic tickets and other fines/penalties for breaking the law.
|Jennifer Mathes, Ph.D.|