Both Prevent Creditors from Engaging in Collection Activity
One of the most sought-after benefits by a debtor filing for bankruptcy protection is the """"Automatic Stay"""" - an injunction that immediately halts litigation, foreclosures, garnishments, and the majority of collection activities against the debtor. Most people are aware that the Automatic Stay is available to those who file for Chapter 7 bankruptcy protection, but the same benefits are also available to Chapter 13 debtors. Once the bankruptcy is in effect, your creditors will be required to obtain court approval before pursuing their claim, and even then, they will only be able to do so if they meet strict requirements and are not adequately provided for by the bankruptcy. In the majority of cases, however, as long as you make your monthly Chapter 13 plan payments, you will be able to keep your creditors at bay, giving you time to reconstruct and reorganize your finances under court protection.
Both Discharge Debt
It may seem obvious, but it's important to note that once a Chapter 13 plan is concluded, the debtor receives (almost) the same discharge as in a Chapter 7 for all unsecured debts included in the plan. (""""unsecured"""" debts are those for which no collateral has been pledged."" Creditors who are entirely or partially provided for in a Chapter 13 plan are prohibited from pursuing collection on discharged obligations. A Chapter 13 discharge applies to more debt categories than a Chapter 7 discharge, including debts acquired while paying nondischargeable tax obligations and debts incurred during property settlements in divorce or separation proceedings.
In addition, Chapter 13 allows debtors to be released from unsecured debt even if their proposed Chapter 13 plan is unlikely to be completed. Unforeseen circumstances may prevent a debtor from executing a confirmed repayment plan in certain instances. The court may grant a special """"hardship discharge"""" so that the debtor can still receive relief. Here are the grounds for granting a ""hardship discharge"": (1) The debtor's failure to make plan payments was not their error; they were faced with circumstances beyond their control. (2) Creditors have received the same amount as they would have in a Chapter 7 case. (3) It is impossible to modify the plan to accommodate the unforeseen circumstances. In contrast to a typical Chapter 13 discharge, the hardship discharge is more restricted and cannot release debts not covered by Chapter 7.
Because declaring bankruptcy can be a very painful and emotional process, it is best to conduct as much research as possible prior to making the decision, and it is always advisable to speak with a knowledgeable professional who can evaluate your personal financial situation and properly advise you on whether or not bankruptcy is the best course of action for you.
" - https://www.affordablecebu.com/
