Anyone considering filing for bankruptcy must choose which type of bankruptcy to file and then meet eligibility requirements for that case filing. Qualifying for Chapter 7 is more difficult because it requires a debtor to be under strict income limitations. For those who do not qualify Chapter 13 bankruptcy is available, which generally has fewer restrictions and is easier to file. However, neither bankruptcy filing comes without responsibilities that, once met, can result in great benefits.
Unlike Chapter 7, a Chapter 13 case does not deny entry based mostly on income level. Unless a debtor has had a previous bankruptcy dismissal or a case discharged within recent years, they are likely to qualify for Chapter 13. However, qualifying and successfully completing a case are separate issues.
In order to have a Chapter 13 case discharged the debtor must complete several steps. They must first provide accurate and detailed information in their bankruptcy filing that outlines their financial situation. The must also attend a credit counseling course, pay the necessary court fees and have their repayment plan approved by creditors. The debtor must then be able to fulfill the terms of the plan and maintain a consistent debt repayment schedule for the three to five year term, before a discharge will be ordered.
Successfully completing a Chapter 13 case can be highly beneficial to the debtor. Not only will they be resolve of their debt burden, but they will be able to repay their debts in a manner that suits their budget. There is also less credit damage in a Chapter 13 case, since the debts were repaid, compared to a Chapter 7 case. The debtor will be able to keep their assets in a Chapter 13 case while payments are being made, along with receiving reduced interest rate and a possible waiver of any delinquency fees as part of the Chapter 13 repayment plan.