Understanding The Laws Of Chapter 13 Bankruptcy

Chapter 13 bankruptcy is frequently also known as reorganization bankruptcy and also as a wage earner's plan. This allows individual consumers to work out a repayment plan for their debt which is supervised by the bankruptcy court. With this type of bankruptcy, consumers are given a period of time, usually three to five years, to repay all of the debt they have incurred. One of the bright spots of this particular chapter of bankruptcy is that creditors are not allowed to call you, harass you, or start any type of collections proceedings.

This type differs quite a bit from chapter 7 bankruptcy. With Chapter 7, your debt is almost completely wiped out. However, you must relinquish your assets in order to repay the debt. But with chapter 13, your debt remains, it is just reorganized and you are able to maintain possession of your assets.

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.

If you have a lot of assets like a house that you do not want to go through foreclosure on, this type of bankruptcy can protect that. If foreclosure proceeding are already in place, the bankruptcy will stop those from progressing further. You may have delinquent mortgage payments which need to be brought up to date, but they may lose their delinquent status. You must also keep up with future mortgage payments.

Another advantage of chapter 13 bankruptcy is that secured debt can be rescheduled. By doing this, an individual may actually lower their overall payments, making it easier to repay their debt.

Chapter 13 bankruptcies can be used for an individual or an unincorporated business or self employed person can file chapter 13 bankruptcy, with limitations. The total amount of unsecured debt must be less than about $307,000 and the total amount of secured debt must be less than about $923,000. These limitations are periodically adjusted according to the consumer price index.

Before you are eligible to file bankruptcy, you must first go through credit counseling. The credit counseling must be through an agency that is approved by the United States Trustee's office. Although the companies may charge a fee for their services, if you are unable to pay their fee, they must reduce the cost and make adjustments for your individual situation.

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.

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

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