If you cannot qualify for a chapter 7, you may have to make 36 or 60 payments to the court before your debt is discharged. Your payments can be as low as a few dollars, you pay what you can afford. The idea is that you learn to make payments. Either way, chapter 7 or chapter 13, your debt is discharged and you are debt free.
Can I keep my home and car in chapter 13 bankruptcy?
Your home and car are still protected by the exemptions in chapter 13 bankruptcy just like they are in Chapter 7 bankruptcy. The best part is that if you have too much equity in either of them, your payments in the chapter 13 bankruptcy will cover the portion that is not exempt or covered by the bankruptcy exemptions.
Not as much as you think, and it is pretty easy to rebuild your credit. If you have a lot of negative reports on your credit report, a bankruptcy might actually raise your credit score because all of the little reports will now be reporting discharged in bankruptcy. The bankruptcy will count against you, but sometimes not as much as all of the other negative reports.
Rebuilding your credit is like crops on a farm. You just have to make a plan and wait. The easy way is to get one or more secured credit cards. You can get these right after bankruptcy. You give Discover or a bank a few hundred dollars to hold in case you don’t pay, and they give you a credit card with that same amount as a credit limit. After a few months of paying on time, they will give you an actual credit card. You are on the road to good credit.
It takes three credit lines reporting current for 24 months to qualify for non-government loans. Homes and cars are even easier than that because the debt is secured by the asset. It would take you a lot longer than that to pay the debts. If you file bankruptcy, you don’t have to pay the debts and you still have good credit in a number of months.
Should I file bankruptcy? I never thought I would file bankruptcy.
I hear this from every other client that walks through the door. Filing bankruptcy does not make you a bad person. Even the best, most frugal person can find themselves in circumstances where they need a little help. It’s ok! Bankruptcy is a confusing and emotionally draining process. After the bankruptcy is discharged, most people feel great relief and are glad they did it.
This is another favorite of people forced to consider bankruptcy. Yes, in an ideal world you should pay your debt. But keep a few things in mind. The same bank that is chasing you to pay late fees and high interest will not be there for you or your family later in life. You need to take care of yourself and your family. You are just money to them. Don’t shed tears for a business. After you add up all of the interest and fees you have paid, they have made all of their money back and then some. Let’s keep in mind what is important. It is a big cruel world. Sometimes you have to be tough and take care of what matters.