A Wisconsin resident may easily agree that filing for bankruptcy is an important decision that could affect one’s self-image and one’s personal financial status. Various provisions are made under the law for filing for bankruptcy in the United States. Under Chapter 13 bankruptcy proceedings, the debtor may undertake reorganization of finances after approval and subsequent supervision of a federal bankruptcy court.
In most cases, a person files for Chapter 13 bankruptcy proceedings when it is the best course of action to regain control of one’s finances. Chapter 13 proceedings freezes loan defaults, repossession and other harsh consequences. Also, upon filing for bankruptcy, any credit cards held in the debtor’s name are cancelled, allowing for no further deepening into debt.
A Chapter 13 filing may make mortgage approval difficult at first. However, professional help may be able to recommend a specialized lender willing to lend to high risk candidates at a higher rate of interest. Additionally, filing for bankruptcy proceedings under Chapter 7 is barred for six years after filing under Chapter 13. An exception might be made for those who pay 70 percent of their unsecured debts. While Chapter 7 bankruptcy can only be filed every six years, Chapter 13 can be filed when needed without a time frame restriction.
Filing for bankruptcy under Chapter 13 rules does not automatically relieve some personal financial obligations, such as alimony. A court order may be necessary in such special cases. The same rule may apply to federally backed student loans, which cannot be extinguished by bankruptcy proceedings. Getting professional help in such cases may help alleviate the situation.
Source: FindLaw.com, “Pros and Cons of Declaring Bankruptcy under Chapter 13,” Accessed on Aug. 1, 2014