How often are debt collectors going to need their payments?
Brad Weil: Well, that’s a beautiful thing about bankruptcy. When you file a bankruptcy of any type -7, 11 or 13 – the filing of the bankruptcy stops all legal action against you and your property. So, the filing of the bankruptcy actually stops the debt collection activity. They cannot call you, they cannot send you a bill, they can’t do anything. If your wages are being garnished, the filing of the bankruptcy stops the garnishment.
“What qualifications there were for 13?”
It is a qualification known as “Feasibility”, what we call plan feasibility. You have to be able to afford to pay back everybody that has to be paid back. Your plan has to be feasible. So, your plan payment has to be high enough to pay the IRS and the car and the arrears on the house. Otherwise, something has to give.
If you do a Chapter 13 and you owe that, you’re actually going to pay it back through the Chapter 13. So, by the end of the Chapter 13, you’ll get it discharged and you won’t owe the tax liability anymore. So, the IRS can’t come knocking on your door after the bankruptcy and say “Hey, we’re still here” and that can happen in a Chapter 7. So, if you’re not careful and you don’t know what you’re doing, you can still face tax liability after Chapter 7, that won’t be the case in a 13. Now, going back to your previous case you had asked, this has kind of popped into my head.
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