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Do You Understand The Rules Of Chapter 13 Bankruptcy

Jun 11, 2008
In bankruptcy there are multiple layers or chapters. Chapter 13 bankruptcy is often known as reorganization bankruptcy and also a wage earner's plan. Chapter 13 bankruptcy may be used by individuals along with unincorporated businesses. This will allow the person filing to structure a repayment plan to their particular financial commitments and obligations that will be supervised and also approved by the bankruptcy court. Under chapter 13 bankruptcy you will be given a particular period of time, often three to five years, for you to be able to get your financial debt repaid. Once you have filed for chapter 13 bankruptcy, the existing creditors will not be able to call or harass you about your payments, and will not be permitted to start collections that will go against you.

Chapter 13 bankruptcy and chapter 7 bankruptcy are significantly different. In chapter 7 bankruptcy all of a person's financial debt is erased. In this erasing of financial debt however all of their assets will be acquired in order to pay off the debt the person owes. Comparing these two chapters of bankruptcy, in chapter 13 bankruptcy the debt you owe remains and becomes reorganized. In using this chapter of bankruptcy compared to chapter 7, you will not have to submit all of your assets and you will be able to maintain them.

Many people view chapter 13 bankruptcy has a debt consolidation loan. Chapter 13 bankruptcy is completely not a loan under any circumstances. The financial debt that you have will stay but will be reorganized and placed into a easier repayment plan so that you will be more able to make the monthly payments. Even though your debt still exists you will not have the contact by the creditors and credit card companies and they will be no longer able to call and harass you about making payments.

Chapter 13 is different than other chapters because it allows people to keep their house and not have to foreclose. After you start chapter 13 bankruptcy the foreclosure procedure will be stopped and offending mortgage payments will be gone. During the duration of the bankruptcy it is a point to be made that when you own a home you still have to make the monthly mortgage payments.

Having a high amount of secured debt, it will be reorganized and put into a manner that payments will be made so that you are more able to make them. In many cases the interest rates of your payments will be lowered into smaller payments and an extension may be granted that will allow for smaller monthly bills and the payments easier to make.

Individuals and unincorporated business have limitations when filing for this chapter of bankruptcy. The total amount of unsecured debt that remains must be less than $307,000. Along with that the secured debt needs to be less than $923,000. There are instances and situations where the limitations may possibly be adjusted according to the consumer price index.

To file for bankruptcy and to become eligible, credit counseling is required. The United States Trustee's office must approve the agency for the credit counseling. There may be a fee accompanied by using these services however if you cannot afford to pay for the services they will try their best to meet your financial needs and lower payments.

Chapter 13 bankruptcy is suitable for the person looking to maintain their assets but get some leverage on their finances to get some breathing space. They reschedule a repayment plan that fits your needs so that it will be easier for you to comply and pay for your debts. If you find yourself in a financial situation where you are unable to get out of bankruptcy may be your best option. However, it is not appealing but may pay off in the end so that you can repay your debts efficiently.
About the Author
For more information and additional insights about Chapter 13 Bankruptcy as well as getting a free bankruptcy evaluation from a qualified lawyer local to you, please visit our web site at http://www.bankruptcy-data.com
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