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Chapter 13 bankruptcy provides a payment plan to get current

Washington state consumers can get a fresh start and relieve the pressure of overwhelming debt by filing and completing a bankruptcy. Chapter 13 bankruptcy gives a consumer the opportunity to pay off debt over a three to five-year period during which the debtor will pay a predesignated monthly installment to a Chapter 13 trustee. As soon as the Chapter 13 is filed, the automatic stay goes into effect and continues to prohibit collections by creditors throughout the bankruptcy.

A Chapter 13 is generally filed where a home mortgage has fallen behind, and the individual or married couple need an extended time to pay the arrears and get loan payments up to date. It can be filed where certain tax debts are going to be paid through monthly payments. After the end of the 36 to 60-month period of successful payments to the trustee, the debtor will get a discharge of all debts.

Some debtors express concern at how the bankruptcy will affect their credit status and credit score. Just like in the Chapter 7, the continuation of payments after the bankruptcy will be a strong factor in getting the score to move back up. The focused individual or couple who pay their debt off each month going forward will see a relatively fast restoration of credit score and credit privileges.

Unsecured debt, such as credit cards and medical bills, are also discharged in a Chapter 13 bankruptcy. The bankruptcy debtor in Washington state may pay a small percentage of the amount due on the unsecured debt, but it will be totally erased at the end of the Chapter 13 bankruptcy. All these matters are best discussed and charted out in advance by consulting with an experienced consumer bankruptcy attorney. The consumer will in that way go into a filing with full knowledge and confidence of the various issues, the impact of the filing, and the goals that can be expected to be achieved.

Source:, "Is bankruptcy discharge a credit scoring factor?", Barry Paperno, Jan. 4, 2018

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