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Understanding Chapter 13 Bankruptcy

Jun 19, 2008
By the time you finish reading this, you will know more about Chapter 13 bankruptcy. As we all know there are a number of different types of bankruptcy and it is essential to at least know the difference. Chapter 13 is not available for all kinds of situations and it should only be filed by the best qualified candidate.

Basic Outline of Chapter 13 Bankruptcy

Chapter 13 can be filed by individuals. It can only be filed by an individual who has a steady and secure source of income.

What exactly is Chapter 13? Chapter 13 is actually a repayment plan. Individual will work together with the court, and creditor to come out with a repayment plan which is based according to the individual's income.

The Filing Process

So how do you go about filing for bankruptcy? First and foremost, you need to see a credit counselor to assess your financial status before the paperwork can begin.

In the process, your income and debts are being looked at. A payment plan is then devised based according to your income. In order to continue with the repayment plan, both you and your creditors have to agree with the plan.

As you can see, this is a lot of work and also time consuming as there are a lot of paperwork to be done and also court hearings to attend. However, the best suggestion I can offer you is that you should have a lawyer who can help you with negotiations with creditors. This may not be easy but trust me, it is worth the trouble. This way, you have nothing to worry about.

The process of fling for Chapter 13 can be time consuming but don't worry about that because as long as you are still undergoing the process of filing for Chapter 13, your creditors will not be able to collect any form of debts from you.

What You Need to Know

Many people wonder why to file a Chapter 13. Since it is a repayment plan you are not getting debts wiped away so why not just do debt consolidation instead? The easy answer to that is the court's involvement in the bankruptcy process.

As mentioned above, you should file for Chapter 13 instead of debt consolidation because the court can protect you. Other than that, you will also have more options. The court will ensure that you are able to afford the repayment plan and thus treated like a willing party.

Additionally, once you file for bankruptcy you are protected. Creditors can no longer pursue collections. That means you may be able to protect your assets and prevent court cases.

Of course, as with bankruptcy in general, it is always best to avoid it if possible. You can start with trying to get creditors to work with you and then only move to bankruptcy if you are feeling threatened with losing assets and court proceedings.
About the Author
Becoming a bankrupt means that you have problems in taking loans in the future. Worst still, the bankruptcy record will stick with you for up to 10 years! Find out how you can avoid Bankruptcy by going to this website today ==> http://www.outofbankruptcy.info
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