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What you need to know before your Chapter 13 Discharge

Erasing DebtNearing a Chapter 13 discharge brings relief to many. After months or years of payments and litigation, you can finally begin your new financial life. As you enter this new phase, there things to keep in mind to insure your discharge and to prepare for financial freedom.

Maintain plan requirements

Fight any urge to celebrate your discharge early. It is easy to feel as though the burden of a payment plan is over before your last payment. Make your monthly payments as required by your bankruptcy agreement. Missing a payment or making a late payment could mean a delay in your discharge.

Setup arrangements for secured debt

A Chapter 13 bankruptcy does not clear all debt. Some secured debt is not dischargeable in any bankruptcy, including most student loans. You still need to pay this debt separately, and, unless you made arrangements with your attorney, you are responsible for contacting each company to make payment arrangements. Contact the state or federal revenue department for issues regarding taxes.

Make a financial plan

To avoid circumstances that put you back in the position as before your bankruptcy, create a plan before your discharge to adequately manage finances. The money that goes toward your current payment plan can go toward secured debt and savings or investments. Create a budget that factors your income after the discharge and include payments for any remaining debt. Make goals for your financial future that involving saving for retirement, putting children through college and spending within your means.

Follow up with details after your Chapter 13 discharge

Once you receive your discharge you need to check your credit to make sure that your credit report notes your discharged debt. Keep in mind that this may take several months. If you do not notice a change in six months, contact your attorney. Hopefully, you kept records of your payments and any pleadings filed on your behalf. If you did not keep records, get a copy of your file from your attorney. Should a creditor attempt to contact you or make a claim against you after the discharge, you need documentation to end any action against you.

A Chapter 13 discharge means that you have officially repaid your creditors according to the terms of your bankruptcy. As you receive your discharge, it is time to build credit and focus on a more stable financial future. Keep the details in mind as you near the end, and welcome your discharge as a second chance for you and your family.

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