What You Need to Know about Chapter 13 Bankruptcy
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Chapter 13 bankruptcy is widely known as the reorganization bankruptcy or the wage earner's bankruptcy. Debtors who file for Chapter 13 bankruptcy are able to keep their property, however they should repay at least a part of their debts over three to five years. Remaining debts may be discharged, or eliminated, after this time.
In order to be qualified for Chapter 13 bankruptcy, a debtor should have a regular income that is sufficient to maintain the repayment program. Debts must also be within a specific limit: Secured debts have to be below $1,081,400, whereas unsecured debts must be below $360,475. Secured debts refer to any debts backed by property, whereas unsecured debts refer to debts that are not backed by property, like a credit card or medical debts.
These debts will be repaid through your Chapter 13 repayment plan. You will be obliged to pay priority debts in full. These are alimony, child support, and some tax debts. You will also be obliged to make payments on your secured debts, such your car loans, and catch up on any payments that are in arrears. If you have any unsecured debts, you may need to make payments towards those as well.
Your repayment plan will last between three to five years, based on your average monthly income and the total amount of your debt. If you have repaid your debts in full, even if you have not completed the whole length of your commitment, your plan will terminate. If you complete your repayment plan successfully, though, even if your unsecured debts are not completely paid off, your plan will be considered ended, and your remaining debts will be discharged, or eliminated.
As soon as a debtor files for Chapter 13 bankruptcy, an automatic stay stops most creditor activity, such as wage garnishment, repossession, and foreclosure. Some collection activities may go on, such as those related to tax debts and child or spousal support. Any missed or late payments through the repayment plan, however, may lead to a reinstatement of collection activities or a dismissal of the bankruptcy case.
Even though bankruptcy forms are readily available and may be filed by the debtor, debtors are strongly advised to employ qualified legal counsel. The process can be remarkably complex, and errors can result in a delay or even dismissal of the case. The help of a bankruptcy attorney can be invaluable and prevent errors, ensure debtors are filing the best form of bankruptcy for their situations.
Chapter 13 bankruptcy may not be appropriate for every person or every situation. For some people or situations, a Chapter 7 bankruptcy may be better able to provide debtors with greater relief from debts and offer the opportunity of a financial fresh start.
Article Source: Articlelogy.com
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