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Things That Can Go Wrong In Chapter 13 Bankruptcy
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Posted On :
Jan-22-2011
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Article Word Count :
410
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Perhaps the biggest risk in Chapter 13 bankruptcy is a change in one’s financial situation that prevents him or her from continuing the repayment plan. If you lose your job or an important source of income while under Chapter 13 protection, you can apply to the court for a change in the terms, or have payments temporarily suspended.
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Bankruptcy is seldom as simple and straightforward as it seems. Cases that seem smooth enough at the outset can later reveal details that complicate the filing, and even get them dismissed. This is especially true in Chapter 13 bankruptcy, where a repayment plan has to be worked out with creditors and approved by a bankruptcy trustee. From forgotten debts to creditors unwilling to settle, there’s a lot that a debtor has to prepare for. Here are some of the most common Chapter 13 bankruptcy complications and how they can be dealt with.
Delinquent Mortgages
A large share of Chapter 13 debtors today are behind on their mortgages and seeking a way out of foreclosure. But few of them are aware that mortgage debt cannot be added to a Chapter 13 plan. Only past-due payments and associated penalties can be repaid under Chapter 13 bankruptcy; current and future debts have to be paid alongside the repayment plan. This means that monthly mortgage payments have to be taken into account during the means test—one has to have enough disposable income (after mortgage and other expenses) to make Chapter 13 payments over three to five years.
Previously Unknown Debts and Assets
All assets and liabilities have to be declared in a bankruptcy, whether under Chapter 7 or Chapter 13. Some debtors only become aware of certain debts, such as back taxes or old credit card debt, when they dig through their files to complete the forms. If such creditors come up during your filing, you may be questioned or asked why they were not included in your petition. It can also jeopardize your case and cause the automatic stay to be lifted, allowing your creditors to resume solicitation actions (including foreclosure proceedings). The same goes for previously unknown assets that go undeclared, such as inheritances.
Change In Circumstances
Perhaps the biggest risk in Chapter 13 bankruptcy is a change in one’s financial situation that prevents him or her from continuing the repayment plan. If you lose your job or an important source of income while under Chapter 13 protection, you can apply to the court for a change in the terms, or have payments temporarily suspended. You can also choose to have your bankruptcy converted to Chapter 7, provided you meet the requirements as well. Or if you have no other choice, you can voluntarily have the case dismissed and allow your creditors to continue collecting payments.
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Article Source :
http://www.articleseen.com/Article_Things That Can Go Wrong In Chapter 13 Bankruptcy_49547.aspx
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Author Resource :
The writer of this article is Wystan North. He has made his mark by writing on legal issues especially on Bankruptcy terms. The author regularly writes on bankruptcy related issues like bankruptcy,Filing Bankruptcy In Ohio, filing chapter 13 and chapter 7 bankruptcy etc.
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Keywords :
filing chapter 13, bankruptcy, Chapter 13 bankruptcy, Chapter 7, Chapter 13,
Category :
Finance
:
Personal Finance
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