The biggest barrier that many people face with Chapter 13 is putting forth a budget that can make things work. For example, some will want to keep their car or home but their income, when we deduct the things they need, such as rent, car insurance, food, child care, gas, electric, telephone and the like, just does not have enough left over to be able to afford the car or afford to catch up on the house payment. As far as I am concerned, the biggest impediment to success in a chapter 13 is actually the debtor’s ability to be able to perform under the plan that they propose to the court.
What Are Some Common Misconceptions About Chapter 13 Bankruptcy?
The number one misconception people tend to have about chapter 13 bankruptcy is that it will stay on the person’s credit report for 10 years, while the actual amount of time is seven years from the date of filing. What that means is that if they file Chapter 13 and pay their debts on a five-year plan, it would be there for two years after the end of the plan. That means it would be possible for someone to buy a house about two years after the date of discharge.
Another misconception is that some people believe they will have to pay back all of their debt in a Chapter 13. In reality, they will only absolutely have to pay what the law demanded with regard to the car loans and the deficiency on their house payments. When it comes to unsecured debt, under Chapter 13 it is only necessary to pay back whatever their budget allowed after necessary expenses, and repayment of secured debts such as cars and deficiencies on their house payments. In most cases, consumers only have to pay back a small portion of their unsecured debt or sometimes even none at all.
Can Employers Find Out About The Bankruptcy?
A bankruptcy is like any other financial matter in a person’s life, in that it will show up on the person’s credit report. So if someone applies for a job and the employer conducted a background check, the employer will see it. Of course, having one bankruptcy will probably be better for them than having a number of open judgments and having bill collectors call the workplace too. The good news is with bankruptcy they would no longer owe anyone anything, so the person will not be missing work because of stress or having to go to court and the employer will not have to deal with wage garnishments, IRS levies or other similar matters.
The bankruptcy itself is part of the public record, so technically anyone can find out about it, although these days it is generally not considered all that important in the grand scheme of things and it is certainly preferable to being financially destitute with their life was being ripped apart by bill collectors and banks. There is a price for everything including getting your sanity back so the fact that bankruptcy is public record information being the one downer in the whole process of taking advantage of the bankruptcy system should not deter you.
For more information on Chapter 13 Mistakes and Misconceptions, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (858) 278-2800 today.