Chapter 13 Bankruptcy: Reorganizing Debt And Structuring Payments With A Chapter 13 Bankruptcy

Reorganizing Debt And Structuring Payments With A Chapter 13 Bankruptcy

By Credit Help

When someone files a Chapter 13, it means that they are not able to repay their debt obligations as they originally agreed to do when the debt was taken on ...

A Chapter 13 bankruptcy is the specific type of legal proceeding that is granted under Federal statues to provide a repayment program for debts that are owed. Under Chapter 13 bankruptcy, a three-year or a five-year repayment plan is created for specific creditors according to the rules governing bankruptcy and through agreement by all parties involved. The arrangements are all overseen by a trustee who is appointed by the Federal bankruptcy court.

When someone files a Chapter 13, it means that they are not able to repay their debt obligations as they originally agreed to do when the debt was taken on. Chapter 13 bankruptcy law allows for these debts to be reorganized for the purpose of repayment. This is different than a Chapter 7 bankruptcy, in which the debts are discharged immediately instead of being set up with a repayment schedule.

In most cases, a Chapter 13 type of bankruptcy has a repayment plan in which the debtor makes monthly, bimonthly or weekly payments to the trustee. The trustee then provides bankruptcy help by taking care of properly dispersing the payments to the creditors. In most instances, the amount of the debt has been restructured and is less than the full amount that is owed to all the creditors.

In a Chapter 13 bankruptcy, the trustee must learn all of the details of the debtor's financial situation in order to determine the amount of the payments that they will pay to the court on a regular monthly basis. The trustee must examine the income sources of the individual or family, and also take into account the obligations they have which are exempt from the process.

Because a Chapter 13 requires that regularly scheduled payments be made to the court, it is generally recommended only for debtors who have a regular and stable income. For those who are seasonal workers or freelancers, filing Chapter 13 bankruptcy is not the best solution for their financial troubles, in most instances.

When a debtor has agreed to the terms and payment plan of a Chapter 13, it is crucial that they always make their payment to the bankruptcy court on time. If they fail to make their payments as agreed, the entire bankruptcy court record and case can be thrown out. Should this happen, the creditors once again have the right to come after the debtor for the full amount of the debt and the protections under the bankruptcy relief process would not be available to them until they are eligible to file bankruptcy again.

If it occurs that a debtor, who is under a repayment plan through a Chapter 13, is not able to keep up with the payment schedule, then there is the possibility to find bankruptcy relief from the reorganization provisions agreed upon. In the case of a situation that arises, in which the debtor is unable to make the payments to the court as agreed, such as in the case of losing a job or other source of income or if they have an extended illness, they might be able to file a bankruptcy claim form known as a "hardship discharge."

The first thing that must be looked at before seeking a "hardship discharge" of a Chapter 13 bankruptcy plan, is to evaluate the bankruptcy to see if it can be modified to a Chapter 7. If it can be modified from Chapter 13 to Chapter 7, then the "hardship discharge" would not be allowed. The case and complete situation should be reviewed by an experienced bankruptcy lawyer in order to know what options are available to the debtor. In all cases, because of the additional stress and expense of returning to the court, to once again fill out the Chapter 13 bankruptcy forms and get approval, every attempt should be made to make all payments as agreed to under the repayment plan.

Next article: Filing For Bankrupty Requires Bankruptcy Classes

Email this page to a friend

Featured Bankruptcy Product:

	Ultimate Debt Guide
	Learn how to get out of debt fast without filing bankruptcy. These methods have legitimately helped hundreds of clients get rid of thousands of dollars in debt in the shortest possible time ... Click here for more details ...

More Articles About Bankruptcy ...

Avoiding Bankruptcy - Tips For Couples
No one ever gets married thinking they will eventually get a divorce. No one ever goes into a partnership expecting to go for broke and no one ever plans on ever having the need to file for bankruptcy....

Things To Consider When Thinking About Filing Bankruptcy
Used to be that it was pretty easy to calculate when you should consider bankruptcy as an option for you and your family. It was simple because it was made to be that way and in fact, anyone who wanted...

How The High Cost Of Medical Care Can Lead To Bankruptcy
Bankruptcy and the high cost of medical care are often tied hand in hand for those Americans that are not insured. Many people have medical insurance through their employers but the cost of this benefit...

Recommended Debt Management And Credit Repair Resources

50 Ways to Protect Your Identity and Your Credit: Everything You Need to Know About Identity Theft, Credit Cards, Credit Repair, and Credit Reports

Identity theft and bad credit are two of the most feared by-products of the information age, and subjects about which few really understand.

In this comprehensive guide, author Steve Weisman offers reassurance in the form of 50 steps that will help you guard against both of these modern perils.

The points of vulnerability are familiar by now: social-security number, credit cards, computer spyware. Weisman addresses each of these weak spots in turn, and lays out the measures required for effective defense.

Even if the suggestions arrive too late to prevent identity theft, he still offers advice on what to do next, such how to get an ID Theft Affidavit from the FTC, how to file a report with the police, and so on.

For those more interested in protecting financial status, Weisman describes techniques for using credit cards wisely, as well as researching all the inherent fine print.

He goes on to explain credit counseling and credit repair, rendered fully in clear terminology that makes every concept easy to understand and apply.

This book really is a comprehensive guide and the clever headlines and highlighted tips throughout the pages will keep you moving through each one of Weisman's helpful hints with interest and attention.

Denied Credit ? Repair Your Credit Report Today!

For more information about Bankruptcy-related resources, see our Finance, Bankruptcy & Credit Repair resources section, subscribe to our Finance, Bankruptcy & Credit Repair Newsletter containing news, updates and insider tips, or go to more articles about Chapter 13 Bankruptcy.

Please note that the information contained on this website is for information purposes only. We strongly suggest you seek professional advice from qualified and competent financial advisors, before making any financial decisions based on the information provided on this website. See our disclaimer for full details.

***