Chapter 13 bankruptcy is a way to get out of debt. When researching the types of bankruptcy that may make sense for your situation, you are likely to encounter chapter 13 bankruptcy. Commonly called a wage earner’s plan, Chapter 13 bankruptcy is a good option for some people who earn a regular income and prioritize keeping their personal property and other assets.
Chapter 13 bankruptcy can empower you to maintain all your property and possessions. At the same time, it can provide you with a doable plan for repaying debt over a designated amount of time that’s usually between three to five years. If you and your lawyer decide that chapter 13 bankruptcy best fit your situation, avoid these common mistakes.
Never Take Your Responsibilities Lightly
As you prepare to file chapter 13 bankruptcy, follow the advice of your attorney. Don’t ignore the big responsibilities that come with preparing to file any kind of bankruptcy. Don’t take on new debts shortly before you plan to file. If you do so, you run the risk of the court denying your bankruptcy altogether, and it may not discharge debt that’s accrued so close to the bankruptcy.
As serious as your debt may be, you don’t want to get into a worse situation by abandoning other responsibilities. For example, it’s probably not a good idea to use the equity you’ve built in your home to pay unsecured debts. The same may be true for borrowing from your retirement plan or 401K. That can result in unnecessary tax costs. Seek the advice of a bankruptcy lawyer before you put any assets in jeopardy.
Never Despair or Assume Your Financial Health is Derailed
Don’t get discouraged if the bankruptcy process gets challenging. Taking the steps to file for chapter 13 bankruptcy and enlisting the help in an attorney to fix your financial woes are two of the best things you can for your financial future. Millions of Americans have chosen to file bankruptcy for very good reasons. There is no need to despair as you figure this out.
Try to stay optimistic and focused on the things you can do to build your financial well-being. After filing, you need to slowly work to rebuild your credit. You may do so with a couple of secured credit cards that you manage well. Also, if you want to buy a home, that is not out of the question if you can afford to do so.
The New York Times reports that you may be eligible for a mortgage that’s guaranteed by the Federal Housing Administration just one year after you leave a chapter 13 bankruptcy reorganization. However, if you are going with a traditional mortgage company, you may need to wait at least two to four years. Nevertheless, it is attainable within a relatively short time.
Never Try to Hide Assets When Filing
Don’t attempt to hide any of your assets when filing chapter 13 bankruptcy. On top of the fact that one should never attempt deception in legal matters, there’s simply no reason to hide anything with chapter 13 bankruptcy. It specifically allows you debtors to hold on to their homes and save them from foreclosure. It lets you keep other possessions and property, too.
Don’t try sneaky things like transferring property, cars, or investments to relatives just prior to filing chapter 13 bankruptcy. That type of behavior may be considered fraud in some situations, and it could result in your bankruptcy being denied altogether.
Finally, filing for chapter 13 bankruptcy can help you get your finances on the right track. Contact the caring, experienced team at Phoenix Law to discuss your options. The sooner you get started on the process, the sooner you can lift yourself out of debt and move on with your life.
With our offices centrally located in Livonia, we represent clients throughout Metro Detroit and beyond, including Westland, Garden City, Wayne, Redford, Belleville, Farmington Hills, Plymouth, Canton , Taylor, Romulus, Northville, Commerce Township, Wixom, Dearborn, West Bloomfield and Detroit