Chapter 13 Bankruptcy maybe the debt plan for you.
Chapter 13 bankruptcy allows debtors to reorganize their debt and establish a repayment plan through the bankruptcy court. Unlike Chapter 7 bankruptcy, which requires liquidation of non-exempt assets, Chapter 13 allows debtors to retain their assets as long as they adhere to the repayment plan.
Chapter 13 bankruptcy typically extend repayment terms with creditors; allowing the debtor to make payments over a period of three to five years. During this time, a Trustee is assigned to oversee the case and ensure payments are distributed to creditors in a timely fashion.
If the debtor fails to make a payment, creditors can request the bankruptcy court revoke Chapter 13 privileges. When this occurs, the debtor fails out of bankruptcy and is forced to liquidate assets.
Certain requirements must be met prior to filing Chapter 13 bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 state unsecured debts must be less than $307,675 and secured debts less than $922,975. Additionally, debtors must undergo credit counseling through an agency approved through the U.S. Trustee Program.
Although debtors can file Chapter 13 bankruptcy without legal counsel, this would be ill-advised. BAPCPA is extremely complicated and requires the assistance of a qualified bankruptcy attorney.
It is a good idea to consult with three or four attorneys prior to filing Chapter 13 bankruptcy. Be prepared to provide detailed financial information including income, expenses, financial and real estate holdings and proof of credit counseling.
Bankruptcy lawyers will prepare and present the petition to the court. Shortly after, a creditor meeting will take place. If creditors want to be included in the repayment plan, they must submit a claim to the court within 90 days of the meeting. Finally, a judge reviews the repayment plan and will either accept, reject or modify it.
Chapter 13 payments can keep people on an extremely short financial leash. All disposable income must contributed to the repayment of creditors. Chapter 13 can be helpful for people facing foreclosure, as long as they are able to remain consistent in their payments. As mentioned earlier, debtor's who fail out of bankruptcy may be required to liquidate assets.
Before making a final decision to file Chapter 13 bankruptcy, consult with an attorney or conduct research via the Internet. Additionally, Simon Volkov presents additional bankruptcy information in his real estate and personal finance article library.