Also called a “wager earner’s bankruptcy,” Chapter 13 bankruptcy is distinct from Chapter 7 in that it does not involve liquidating non-exempt assets to pay off debts. Instead, you work out a three- or five-year repayment plan with your creditors, with the duration depending on your income level. If you’re considering filing for this form of bankruptcy, you might wonder, “What happens when my Chapter 13 is paid off?” Will your debts be entirely discharged, or will you still have certain obligations?
The experienced bankruptcy team with Loan Lawyers has the answers you need about the Chapter 13 closing process and can guide you throughout your bankruptcy filing. Take your first step towards debt relief by contacting us today to schedule a free consultation with a Fort Lauderdale bankruptcy lawyer.
Completion of Repayment Plan
Before the bankruptcy court discharges your eligible debts (meaning you no longer have to pay them), you must complete the payment plan you agreed to with your creditors. Missing a single payment can jeopardize your plan and lead the courts to throw out your bankruptcy case, putting you back at square one. If you’re going to miss a monthly payment or have already missed one, talk to a bankruptcy attorney immediately, as there may be ways to resolve this matter proactively.
Discharge of Debts
Once you’ve finished your repayment plan, the court will discharge most of your remaining unsecured debts – that is, those not tied to collateral. This means you no longer have any legal obligation to pay those debts. The discharge process wipes out unsecured debts like credit card balances and medical bills, giving you a fresh start and easing your financial burden significantly. However, you may still have to pay certain debts, such as back taxes and child support obligations.
Renewal of Secured Debts
Unlike Chapter 7 bankruptcy, Chapter 13 allows you to reschedule, or renew, certain secured debts – those backed by collateral. While you cannot reschedule the mortgage payments on your primary residency, other secured debts may be extended over the life of the Chapter 13 plan, potentially lowering payments.
Removal of Bankruptcy from Credit Report
Bankruptcy remains on your credit report for up to seven years, which will likely negatively affect your credit score. After this period, your bankruptcy is automatically removed, which can significantly boost your credit rating. The removal process marks a positive change in your financial profile, making it easier to obtain new credit, loans, and better interest rates.
Case Closure
The court will officially close your case once you have completed your repayment plan. This final step signifies the end of your bankruptcy process, allowing you to move forward with your life. Case closure means all legal proceedings are complete, and you can now focus on rebuilding your financial future without the weight of past debts.
Contact Our Fort Lauderdale Chapter 13 Bankruptcy Lawyers for Help
Even in the closing months of a Chapter 13 bankruptcy, a mistake could cost you all your hard work and disrupt your finances. It’s crucial to work with an experienced bankruptcy law firm like Loan Lawyers throughout your Chapter 13 attorney. We have the knowledge and experience to see your case through to a successful conclusion. Call us today or complete our contact form to get started.
