Chapter 13 bankruptcy is often referred to as a “wage earner’s plan” because it is designed for individuals who have a steady income and can make payments on their debt. However, several lesser-known facts about Chapter 13 bankruptcy may surprise you. Make sure to Press The Restart Button.
You can keep your property.
Many people think they will lose all of their property, including their homes and car. However, this is not the case with Chapter 13 bankruptcy. You can keep your property as long as you continue to pay your debt according to the terms of your repayment plan. If you are behind on your mortgage payments, you can use your Chapter 13 bankruptcy to catch up on those payments and keep your home.
You can include tax debt in your repayment plan.
Another lesser-known fact about Chapter 13 bankruptcy is that you can include tax debt in your repayment plan. This is important because tax debt is not typically dischargeable in bankruptcy. However, with Chapter 13, you can include your tax debt in your repayment plan and pay it off over a period of three to five years. This can be a great way to get a handle on your tax debt and get back on track with the IRS.
You can pay off the unsecured debt over time.
Chapter 13 bankruptcy is often considered a way to catch up on mortgage payments and keep your home. However, it is also a great way to pay off unsecured debt, such as credit card debt, medical bills, and personal loans. With Chapter 13, you can include these debts in your repayment plan and pay them off over a period of three to five years. This can be a great way to handle your unsecured debt and get back on track financially.
It does not affect your credit score as much as Chapter 7.
Many people hesitate to file for bankruptcy because they worry about how it will affect their credit score. While it is true that bankruptcy can hurt your credit score, the impact is not as severe with Chapter 13 as it is with Chapter 7. With Chapter 13, your credit score will likely take a hit, but it will recover much more quickly than if you had filed for Chapter 7. Additionally, you can rebuild your credit score immediately after filing for Chapter 13.