Filing For Chapter 13 Bankruptcy - Useful Facts You Should Know
By Credit Help
Chapter 13 bankruptcy is a form of bankruptcy in which an individual can pay back their debts after they have tried other solutions without achieving desired results ...
Chapter 13 bankruptcies are one of the two different categories of bankruptcy that can be used to repair your finances. In fact, Chapter 13 bankruptcy is a form of bankruptcy in which an individual can pay back their debts after they have tried other solutions without achieving desired results. This form of bankruptcy came about after Congress enacted a law pursuant to Title 11 and its aim is to help peopled that have suffered extreme debts to make a new beginning in life while at the same time also offering hope to creditors that they will get some if not all of their dues paid back.
Voluntary Act
Filing for Chapter 13 bankruptcy is a voluntary act started by an individual who has realistic income and who wishes to pay off their outstanding debts from such income. After filing for Chapter 13 bankruptcy, the court will supervise the reorganization of the debt of the person that filed for bankruptcy under this chapter. What’s more, this Chapter also requires that the debtor pay off their debts, though a restructured repayment plan and under the supervision of the court (federal bankruptcy) without having to liquidate their assets in order to clear off their debts.
Of course, to benefit from filing for Chapter 13 bankruptcy it is necessary that the debtor has a ready means of income that will be used to create a more realistic plan for repaying the debts, which typically should be paid off between three and five years. Furthermore, the extent of unsecured debts should not exceed $336,900 and the extent of secured debts should also not exceed one million odd dollars.
Payment of the reorganized debts will be made through deducting certain sums of money from the debtor’s pay. Also, the Chapter 13 bankruptcy requires creating a plan for repaying the debt in a span of at most five years and this plan must be set out in writing and must be agreed to by both debtor and the creditors.
There are several advantages to filing for Chapter 13 bankruptcy and of course there are certain disadvantages as well. The main disadvantage to filing for this form of bankruptcy is that the individual’s credit report will have a black mark on it for up to seven years though this is three years less than if the same person filed for bankruptcy under Chapter 7.
The advantages of filing for Chapter 13 bankruptcy include the fact that you can use this Chapter to stop foreclosure and you can also realize super-discharge of certain debts that cannot be discharged under Chapter 7 bankruptcy.
Next article: Bankruptcy Filing - Non-Dischargeable Debts
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