Chapter 13 bankruptcy does not just immediately discharge your debt. Chapter 13 bankruptcy provides you with a managed opportunity to get current on your debt and pay it off in a timely manner. Chapter 13 bankruptcy requires more than just the filing of legal paperwork; Chapter 13 is about changing your financial life.
1. Payments May Be Taken Directly from Your Paycheck
With a Chapter 13 bankruptcy plan, one of the stipulations is that you have to make your bankruptcy payments directly from a withdraw from your paycheck. This is going to require you to let your work know about the deduction and set up the deduction through the payroll system at your job.
There are very few circumstances in which you can avoid direct payments from your paycheck. Avoiding direct payments only works if you can show that you will suffer a serious consequence at your place of employment by having a direct payment come out of your paycheck. For example, if you will get demoted, lose your job, or lose your security clearance if your job is aware of your bankruptcy. In that case, the court may allow you to pay the trustee of your bankruptcy directly. However, this is only granted in rare circumstances.
2. Bankruptcy Status Will Show Up on Your Credit Report
Your bankruptcy status is going to show up on your credit report. That means if you go to purchase a new car or apply for a new store credit card, your bankruptcy is going to show up on your credit report. It is going to take years for your bankruptcy to fall away from your credit report, so be prepared to explain your bankruptcy on your credit report for years to come.
3. You Have to Stay On Top of Your Bills
Next, you are going to have to stay on top of your bills. If you fall behind on your bills, the lenders can file motions against you in court. So, make sure that you stay on top of your mortgage, car payment, property taxes, child support payment, and insurance.
It is a good idea to work with a financial advisor to set-up a plan that will allow you to stay on top of your bills. For example, you may want to set up a separate bank account just for paying your bills and set up automated payments. Developing a solid budget will help you stay on top of your bills during the years that you are under Chapter 13 bankruptcy.
Chapter 13 bankruptcy is not just a legal process; it is a process that is going to directly impact and change your life. You are going to have money taken out of your paycheck to cover your debt. You are going to be expected to stay on top of your bills, and your bankruptcy status will show up on your credit report.
For more information, contact a lawyer like Stuart J Sinsheimer Attorney at Law.