Free Articles at Neutron Marketing Article Publishing and Distribution » Finance » Chapter 13 Bankruptcy - Understanding The Procedure
Previous Article - Why You Must Raise Your Credit Score
Next Article - Cyprus Property Investment

View PDF | Print View | Html Version
by: JayAnderson
Total views: 5
Word Count: 581

There are multiple types or chapters of bankruptcy. Chapter 13 bankruptcy is frequently also known as reorganizational bankruptcy and also as a wage earner's plan. It can be used by individuals as well as unincorporated businesses. This allows the filer to structure a repayment plan for their financial obligations which is supervised and approved by the bankruptcy court. Under this plan, you are given a period of time, typically three to five years, to get your debt repaid. After you have filed, your existing creditors cannot call or harass you, and are not permitted to start collections proceedings against you.

Each case is different but this chapter is ideally suited for some people when they are considering bankruptcy. By contrast with Chapter 7 bankruptcy, your debt is almost completely wiped out, although the bad news is that your assets may be sold or liquidated in order to pay off your debt. But with Chapter 13, you retain your assets and your debt is not eliminated but it is restructured so that you have the financial breathing room you need to comfortably and adequately make the payments.

Some people view Chapter 13 bankruptcy as a debt consolidation loan. In many instances, an individual's debt is restructured and a repayment plan is formed. A trustee then distributes the money to all of the creditors. Under chapter 13 protection, individuals will not have any type of contact with the creditors. Certain debts are given a priority and must be repaid in full. They are put at the top of the repayment plan so they are paid first.

This type or chapter gives homeowners the opportunity to keep their house from being foreclosed on. Once chapter 13 bankruptcy proceedings begin, a foreclosure procedure may be stopped and over time, delinquent mortgage payments may be cured. However, homeowners must still make all monthly mortgage payments during the time of the bankruptcy.

If you have a significant amount of secured debt, it can be restructured and rescheduled to make it easier for you to make payments. The interest rate may be lowered and/or the term may be extended which will result in lower monthly payments, thereby making it easier for the consumer to make the payments.

Any individual, even if they are operating a business that is unincorporated or are self employed can file for chapter 13 bankruptcy as long as the overall unsecured debt is less than $307,675 and secured debt is less than $922,975. The baseline amounts are adjusted according to the consumer price index.

It is interesting to note that in order to be eligible to file for bankruptcy protection, you are required to attend credit counseling sessions. This is the law, even though the majority of bankruptcies are not done due to financial mismanagement. The agency providing this service must be approved by the courts. They may charge a fee, although that fee must be reduced if it is beyond your current means.

Chapter 13 bankruptcy allows individuals to repay their debt, while maintaining possession of their assets. A repayment plan is made, thereby allowing individuals to repay their debt over a given period of time. This is ideal for someone who is still able to make payments, but may very well be overwhelmed by the monthly payments they are currently making. Should circumstances change and the individual is no longer able to follow the repayment plan, then it may be time to consider filing for chapter 7 bankruptcy.

About the Author

For more insights and further information about Chapter 13 Bankruptcy as well as getting a free bankruptcy evaluation from a bankruptcy attorney local to you, please visit our web site at http://www.bankruptcy-data.com

---

Rating: Not yet rated

--Choose-- 0 1 2 3 4 5

No comments posted.

Add Comment

Enter the code shown