How Chapter Thirteen Bankruptcy Can Help People In Debt
A chapter thirteen bankruptcy is better than a chapter seven bankruptcy, but there are different criteria to filing for a chapter thirteen. Not everyone can file for a chapter thirteen bankruptcy unless they have a vehicle or a house that they are paying for. When a person files for a chapter thirteen bankruptcy, they are not being absolved of their debts, compared to a chapter seven. They are filing a chapter thirteen bankruptcy in order to stop a foreclosure from happening, or to keep a vehicle from being repossessed. The chapter thirteen bankruptcy can keep a bank lender from foreclosing on house by giving the debtors time to pay off the late payments in a matter of five years. The same goes for a vehicle. The debtors still get to keep their home and their vehicle. When a person becomes late on their house or vehicle payments after six months, the procedures for a foreclosure or a repossession will usually start. It is better to start a chapter thirteen bankruptcy before the foreclosure starts. Once a foreclosure starts, it is very hard to stop it.
A chapter thirteen bankruptcy is the only real aid in a situation where a person is about to lose their home. A debt consolidation or negotiation program cannot really help in these situations, so a chapter thirteen is the only real viable option that a person will have on their side. The late payments and fees will have to be paid up after the five year time period, or the foreclosure will go back into process. People will still need to make their regular house payments, but they will also need to settle a payment plan through the bankruptcy court with a reasonable payment to catch up on back payments and late fees. This is a great solution for people who do not want to lose their homes. A person can try to file a chapter seven bankruptcy, but if the chapter seven does not go through, they will automatically be put into a chapter thirteen program. Some people believe that they can catch up on their payments if they did not have to pay so many other bills, such as credit card bills, so they try to file a chapter seven bankruptcy to absolve themselves of those debts, but if they are denied a chapter seven, it will put them into a chapter thirteen.
The best thing for a person to do is automatically reach out for help the minute they start to go into default on their home loans. It is much better to file a chapter thirteen bankruptcy than it is to wait until the bank decides to foreclose on the home. A chapter thirteen can take some time to get together, so people need to leave themselves enough time to file.