Is Paying Off Chapter 13 Bankruptcy Early a Good Idea?

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Sometimes called “wage earner’s plan” or “reorganization bankruptcy,” Chapter 13 bankruptcy is available for people who intend to repay some or all of their debt without liquidating their assets. It spreads the debt burden out into payments that are made over a three to five year period, based on the person’s income, allowing them to pay back what they owe through installments.

Making payments toward a Chapter 13 bankruptcy plan can feel like a long journey, which can make it tempting to pay it off early if possible. If you received a windfall — such as an inheritance, lottery winnings or a large bonus at work — you might be thinking about paying the debt in full.

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Keeping Your Car In Bankruptcy

Bankrate
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Unlike credit cards, many personal loans—including car loans—are secured debts. Secured loans require collateral. In the case of an auto loan, the collateral is the vehicle itself. When you default on this type of loan, lenders can legally repossess the collateral on the loan (i.e., your car). But for many people, a car is essential, whether used to get to and from work or to care for an elderly parent. That’s why many there are several ways you can keep your car in bankruptcy.

 

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Urban Legend #2 - People File Bankruptcy Because They Live Beyond Their Means

By Keith Rucinski, Akron, OH
Chapter 13 Trustee

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“Only people who live beyond their means file bankruptcy.”

When people think of individuals who have filed bankruptcy they often think of people who cannot manage their money and live “beyond their means.” Images of expensive cars and large homes often come to mind, this is not commonly seen with those who file for bankruptcy. This is one of the most common urban legends about bankruptcy and those who seek bankruptcy protection in order to get a fresh financial start.

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Can You File a Bankruptcy Case Without Using A Lawyer

By Jason Wilson Aguilar

Chapter 13 Trustee | Seattle, WA

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Yes, you can file a bankruptcy case without a lawyer. There is no legal requirement that you must have a lawyer represent you in a bankruptcy case. The real question is whether you should file a bankruptcy case without a lawyer who specializes in bankruptcy law. In my opinion, the answer to that question is no.

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Bankruptcy Legend: I do not need a lawyer to file Bankruptcy, all I have to do is complete some forms.

Keith L. Rucinski

Chapter 13 Trustee

Akron, OH

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Bankruptcy Legend: I do not need a lawyer to file Bankruptcy, all I have to do is complete some forms.

In the United States people can choose to represent themselves in court, including bankruptcy court. The term to represent yourself without counsel is “pro se”. A lawyer who represents people in bankruptcy does much more than “complete some forms. Good counsel will help their client: Determine if a bankruptcy is necessary. Sometimes there are alternatives.

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Why Some Chapter 13 Cases End Before They Ever Get Started

Filing a Chapter 13 case is easy.  Keeping it going is the tricky part. 

Jeff Narmore, PC
Narmore Law Office

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A Chapter 13 case can provide immediate relief and peace of mind.  There is a certain element of “instant gratification” that gives it appeal on day one of the case.  In many jurisdictions a case can be filed for “no money down.”  Spending a few hours at an attorney’s office and signing some paperwork will make the foreclosure, repossession, garnishment or other collection efforts stop, as if by magic.

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Nine Things to Look for When Picking a Bankruptcy Lawyer

BFine Administrator

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Deciding to file bankruptcy is difficult, stressful, and can seem expensive. It can involve other family members and will have a lasting effect on your financial future.

The process is complicated. It is important to have a good attorney by your side.

How do you pick a good bankruptcy attorney? The choice is very important and it is usually made when you are stressed out.  Here are things to consider when picking a lawyer.

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BFine Terms You Need to Know

BFine Administrator

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Managing your financial future is easier when you understand what is being said. Below are some of the key terms that are used with finance and bankruptcy.

For more definitions visit:

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Bankruptcy Urban Legends Part 1

By Keith Rucinski, Akron, OH
Chapter 13 Trustee

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“If I file for personal bankruptcy I will lose my car and house, and be left destitute the rest of my life.”

This is one of the most common urban legends about bankruptcy. Filing for bankruptcy does not mean you will lose all your “stuff” and be left destitute. The purpose of bankruptcy is to allow people to get a fresh financial start. Some famous people who have filed bankruptcy to get a fresh start include Harry Truman (33rd President of the United States), Walt Disney, and Henry Ford.

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About Personal Bankruptcy

Pros And Cons Of Filing For Bankruptcy

Forbes

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Bankruptcy has long had a stigma in the U.S. People who file for bankruptcy protection have been stereotyped as irresponsible, unethical or lazy. But many Americans find themselves facing bankruptcy due to an unexpected crisis, like job loss, a medical emergency or divorce.

Bankruptcy is designed to give debtors a fresh start and provide relief from creditors. But filing for bankruptcy is a complex decision, and while it may be the best route for some, it’s not ideal for every situation.

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How Much Does It Cost To File For Bankruptcy?

Forbes

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Filing for bankruptcy protection can free you from burdensome debts and nagging bill collectors, but there’s a cost. Depending on the type of bankruptcy, consumers may have to pay a few hundred to several thousand dollars to get relief from debt under the nation’s bankruptcy laws.

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What Chapter 13 Bankruptcy Is And How It Works

The Good Men Project

Chapter 13 Bankruptcy paper

Times are challenging in America with the coronavirus. You may be experiencing the stress that comes with financial hardship and are considering a Chapter 13 bankruptcy. The purpose of this article is to inform you about the most important things about Chapter 13 bankruptcy.

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What Can Cause My Chapter 7 Bankruptcy To Be Denied?

Lawyers.com - July 8, 2022

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Was your Chapter 7 bankruptcy denied? If so, you may be wondering what happens next. First, you should understand why your Chapter 7 bankruptcy can be denied.

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How Much Does It Cost to File Bankruptcy? 3 Things to Know

The Good Men Project - July 14, 2022

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The cost to file bankruptcy is $338 for a Chapter 7 bankruptcy and $313 for a Chapter 13 bankruptcy for bankruptcy filings in 2022, but the answer becomes more nuanced and confusing if you decide to file with a bankruptcy attorney and if you are trying to get the filing fees waived.

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Chapter 7 Bankruptcy: What Is It, and Is It Right for You?

Forbes Advisor - June 2, 2022

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Chapter 7 bankruptcy is the bankruptcy filing most often used by consumers. It provides protection from creditors, puts a stop to most collection efforts and can eventually wipe debts away.

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If you’re facing bankruptcy, here’s what experts say to do before, during and after you file

CNBC

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Bankruptcy may feel like financial rock bottom but it’s a chance to start again fresh. It’s best to work with experts to make sure your personal bankruptcy is handled correctly and eases rather than complicates your financial life.

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It's the Law: What can I keep in bankruptcy?

Post Register - May 29, 2022

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Many people wonder if they file for bankruptcy, what will they get to “keep?” Will they get to keep a house, a car, or an investment property?

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My dad declared bankruptcy. What happens to mom’s credit?

NJ Moneyhelp - Nov. 23, 2021

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Q. My father declared bankruptcy without telling my mother. How will this affect her credit?

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Bankruptcy offers a fresh start after a financial crunch and helps creditors get their fair share of what's left

Business Insider - Dec. 17, 2021

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Bankruptcy is a legal process that helps individuals and businesses resolve outstanding debts while also fairly managing the payments owed to creditors. Creditors involved in bankruptcy proceedings, however, typically don't receive full payment. 

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Fresh Start

Is 401(k) safe in bankruptcy?

Bankrate - May 27, 2022

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If you are filing for bankruptcy, you will likely be relieved to hear that, yes, your 401(k) is generally safe in bankruptcy.

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Buying A House After Bankruptcy

Forbes - Nov. 30, 2021

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Buying a house can be a challenge in itself, but if you’ve had to file for bankruptcy, owning a home may seem all the more difficult to achieve.

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5 Ways to Get Financing With a Bankruptcy in Your Past

The Motley Fool - Dec. 15, 2021

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Just because you've had a bankruptcy doesn't mean you can't get financing to invest in real estate. Find out how.

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How Bankruptcy Works

What To Expect During An Initial Consultation With A Bankruptcy Attorney

Lawyer Monthly

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Many feel uncomfortable talking about it, even with a trusted friend or family member. The simple mention of the word can bring up a wide range of feelings. 

Fortunately, a bankruptcy attorney understands that you are going through a very trying and emotional moment. They’re mindful of the fact that most bankruptcies are caused by events outside of your control, such as the loss of a job or a serious health problem. No bankruptcy attorney will ever blame or pass judgment on their client. Instead, they assist them in finding a workable solution to their financial woes, including credit counseling and debt settlement.

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How To File For Bankruptcy

Yahoo

women and bills

Feeling crushed by debt is stressful, but there are options. If you find yourself saddled with more debt than you can pay off in a timely manner, you can file for bankruptcy. Filing for bankruptcy is a serious step and one that often comes with negative connotations. Some people worry that it’s a sign of failure or that they’ll then carry a financial stigma that will affect their credit. However, sometimes bankruptcy is the best way to get a new start.

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How Long Does It Take to File Bankruptcy?

Vents Magazine

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When considering filing for bankruptcy, many people wonder how long it will take. The process can vary depending on the type of bankruptcy and the individual’s case, but in general, it is usually a few months from beginning to end.

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How Chapter 13 Bankruptcy Works in Texas

Legalreader.com - June 1, 2022

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You may make a good income but are unable to afford your debts, so you are looking at a Chapter 13 bankruptcy in Texas. Filing Chapter 13 bankruptcy is a big decision. You are committing to a bankruptcy repayment plan that could last for up to five years.

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Will My Income From Cannabis Affect My Bankruptcy?

Lawyers.com - May 31, 2022

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Are you considering filing for bankruptcy? Do you receive any income from the sale of cannabis or cannabis products? 

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Bradley’s Bankruptcy Basics: The Automatic Stay and the “Why” Behind the Warnings: What Happens Once a Debtor Files for Bankruptcy?

National Law Review - Jan. 19, 2022

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Many creditors have been warned of the need to halt collection efforts once they are put on notice that a debtor has filed for bankruptcy. 

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A person in possession of a debtor’s property upon a bankruptcy filing now has more guidance from the Supreme Court as to the effect of the automatic stay.

JDSupra - Nov. 3, 2021

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A person in possession of a debtor’s property upon a bankruptcy filing now has more guidance from the Supreme Court as to the effect of the automatic stay.

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Recent News

Study Reveals Racial Bias in Bankruptcy Cases

Ebony - Nov. 2, 2021

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According to a recent study, approximately 30 percent of African-American filers are more likely to have their bankruptcy cases dismissed than non-Black bankruptcy filers, Yahoo News reports.

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Bankruptcy Filings Continue Steady Drop

US Courts - May 17, 2022

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Bankruptcy filings continued a steep two-year-long fall that coincided with the start of the coronavirus (COVID-19).

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The materials on this website are for general information purposes only and should not be construed as legal advice, legal opinion, or any other advice on any specific facts or circumstances. You should not act or refrain from acting upon this information without seeking professional advice.