You were unable to repay your debts and remained delinquent on your accounts. This will severely harm your credit score and may prevent you from obtaining credit in the future. Likewise, if you default on a mortgage loan and do not make arrangements to catch up on payments, you risk losing your home to foreclosure.
If you qualify for Chapter 7 bankruptcy, your debts will be discharged and you will no longer be responsible for their repayment. However, a Chapter 7 bankruptcy is more likely to harm your credit than a Chapter 13 bankruptcy. Your credit score will reflect the fact that you did not redeem your debts, as they were canceled instead of repaid. Mortgage loans, student loans, and tax debts are not dischargeable under Chapter 7. Consequently, you will continue to be liable for these debts.
Chapter 13 Bankruptcy
A Chapter 13 plan allows you to repay your debts through a monthly payment over a specified time period, typically between three and five years. Repaying your debts in full with modified payment terms will reflect more positively on your credit report than filing for Chapter 7 bankruptcy or ignoring your debts entirely. Although your Chapter 13 status will appear on your credit report, many lenders are willing to disregard it because they know you were able to pay off all of your debts before you were discharged.
What happens if you cannot afford your payments now that you have a Chapter 13 case? There are two possible responses. Your case may initially be dismissed. Second, the autonomous stay will no longer provide you with protection. Let's explore both further.
Case Dismissal
If you fail to adhere to the terms of the payment plan, the court may discharge your case. If your case is dismissed, your repayment plan will be rendered null and void, and you will continue to be responsible for repaying your debts on your own. After your case is dismissed, you may not be able to file again for some time. However, if you voluntarily request the dismissal of your case as opposed to having it dismissed by the court, you may retain the right to re-file within a brief period of time.
At times, it appears that bad occurrences occur in clusters. You were already having difficulty paying back your debts when you filed for bankruptcy. Perhaps you were cut off, were unable to find a job, or suffered from a medical condition that increased your debt. If you are unable to maintain your Chapter 13 arrangements, you should immediately consult with a bankruptcy attorney. Before you miss a Chapter 13 payment, a bankruptcy attorney can evaluate your situation and help you find a solution to your prolonged financial troubles. They can also assist you in requesting a dismissal before the court does, thereby sparing you time and aggravation.
Automatic Hold Is Revoked
An automatic stay protects you from creditors and lenders when you file for bankruptcy. This motion prohibits creditors from contacting you in an attempt to collect. Moreover, this motion prevents creditors from seizing and liquidating your assets. If you filed for Chapter 13 to avoid foreclosure on your home, this protection will be lifted if you default on your Chapter 13 payments. Once the automatic stay is lifted, creditors may attempt to liquidate any of your secured debts.
Many individuals are unaware that they must continue making their monthly mortgage payments in addition to their Chapter 13 plan payments. However, the mortgage payment is not incorporated into the repayment plan. Contact a bankruptcy attorney immediately if you are unable to keep up with your plan repayments. You are not required to become delinquent and have your case dismissed for default. The optimal time to act is prior to missing a payment.""
" - https://www.affordablecebu.com/
