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Some people think that it is better to have all of your debts discharged when you file for bankruptcy because after the process, you will not be liable to repay your debt. All has been taken care of. And that is the reason most of them think that it would be better to file for a Chapter 7 instead of a chapter 13. But when you study it closely, you will have less because you liquidated all possible property that you have just to repay your creditors. As compared to a Chapter 13, they will allow you to keep some since you will still be paying your debt in a period of time.

How does a Chapter 13 work?

When people are having difficulty in paying their debt because of increased interest and other fees and yet they still want to pay, they will be filing this Chapter. In a bird`s eye view, a Chapter 13 enables you to come up with a repayment plan that will be beneficial for you and your creditors. You will propose this plan to the bankruptcy courts. You will follow this plan and give the payment to the bankruptcy court even if it is still under review. If it is approved, you will have 3 to 5 years to complete the plan and after that, you will be done with your debts. Any amount remaining from your creditors will be discharged already.

Is there a possibility that they can change the repayment plan I proposed?

Yes there is. When you propose a plan, the bankruptcy court will review it whether the amount that is stated in your proposal is the maximum that you can afford. Because if they go over your income, your debts, and your assets, and see that you are able to pay more, they will ask you to revise your plan. They have to make sure that the plan will benefit your lenders as well because most of the time, the lenders have to discharge the debt and no one else will pay for it so they lose revenue.

How can I qualify for a Chapter 13?

You need to have a regular income because if you don`t, then it would be difficult to determine whether you can follow a repayment plan diligently. A regular income can give them an idea on how much you make a month. With additional documents like declaration of your assets, your debts, even your expenses at home they would be able to picture your situation and your problem.

Is it really better than Chapter 7?

Well, if you prefer to keep your properties and keep paying some of your debts like a home loan or a car loan then yes it is. You get to keep the debt and the property without starting anew.

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