When looking to declare chapter 13 bankruptcy, Topeka, KS residents must be aware of what they are getting into first. There are many rumors and misconceptions about filing bankruptcy that have weaseled their way into the myth that surrounds filing. While the process is difficult at times and surely is not something to be gone into lightly, it is also much simpler than many believe it to be.
In order to avoid perceived drastic measures being taken by the courts in the case of Chapter 7 bankruptcy, many choose to file Chapter 13 in Topeka, KS. In Chapter 13 bankruptcy, a person or business are allowed to go through what amounts to a financial reorganization, thereby allowing them to consolidate all their debt into one payment. In the case of this debt consolidation, interest is temporarily suspended and the debt being repaid is on whatever the amount was at filing. This process is designed for those who can and still do work to receive income and can still pay on past debts.
Chapter 13 differs from Chapter 7 because of the debtor’s ability to repay. In Chapter 13, a debtor proposes a plan to pay back their debts within three to five years. This plan is decided between the debtor and a financial planner or lawyer helping them file. The first payment into the plan must begin within a forty-five day window after the case has begun. One major upside is that during this period a creditor cannot call or otherwise contact the debtor in an attempt to collect a payment. Most times the debtor gets to keep any property that the debtor has considering they are making the attempt to pay back the debt. Also of note is the ability to stop foreclosures, though the foreclosure would be reinstated after the filing has been completed. This provides an individual to find another home or restructure their debt on the foreclosure in the mean time.
Disadvantages of Chapter 13 include damage to your credit history, which is what stops many from filing. Under the Fair Credit Reporting Act, your filing can stay on your credit report for up to 10 years. During which time you may not obtain new credit or debt for between one and two years. While this may be a deterrent to some, bad credit can often be just as harmful to a credit rating.
