Our goal is to present detailed chapter 13 bankruptcy information. It is our mission to inform you about chapter 13 bankruptcy to help you avoid filing chapter 13..
There are several types of "restructuring" bankruptcy: 11, 12, and chapter 13. Consumers with secured debts under $871,550 and unsecured debts under $269,250 can file for Chapter 13.
There are many differences between chapter 13 and chapter 7 bankruptcy. The most drastic difference is that a 13 allows you to retain certain belongings that would otherwise be liquidated in Chapter 7. You can keep your house and automobile under either plan provided your equity does not exceed certain limits. Under Chapter 7, you won't be able to keep rental properties, antique collections, etc. which you may keep under a chapter 13 filing.*
Filing can be a time-consuming process. The chapter 13 bankruptcy law varies and each state has its own exemption limit. The process begins when a chapter 13 bankruptcy form is submitted to the court serving the area where the debtor resides.
Consumers (with more debt than what is allotted under Chapter 13 bankruptcy law debt limits) and businesses can file Chapter 11 -- a lengthy and expensive process. In any restructuring bankruptcy, you file a schedule with the court proposing how you plan to repay your creditors. Some debts must be repaid in full, some in part, and others aren't paid at all. All of the debts must be scheduled with the creditors’ name and address so they receive notice of the filing and can collect their share of any money being paid. Sometimes debtors think they should omit a creditor but this violates the Chapter 13 bankruptcy law, and is unnecessary, because a debtor can always pay a debt voluntarily, even if it has been discharged. This is stated under law 11 U.S.C. § 1301
Filing chapter 13 is usually for people with too much income to file chapter 7 or for those with a lot of non-dischargeable property. You cannot file a Chapter 7 if you have previously filed within the past 6 years unless you paid off 70% of your debts when previously filing chapter13. However, you can file a Chapter 13 bankruptcy form any time.
A trustee proposes a 3-5 year plan to creditors where the debtor repays part of his debts out of future income. The law states that a plan lasts for no more than a five-year period (11 U.S.C. § 1322(d)). You will live under a strict budget; the court will not allow money to be spent on anything nonessential. The debtor’s employer can withhold the payment from the debtor’s paycheck and transmit it to the trustee.
A meeting of creditors is held where the debtor is inspected under oath. This meeting is usually held between 20 - 50 days after filing. If the United States trustee administrator designates a place not regularly staffed by the trustee or administrator, the meeting may be held no more than 60 days after the order for relief, according to law 2003(a). The debtor attends the meeting where creditors may appear and ask questions about the debtor’s finances and repayment plan. This is detailed under law 11 U.S.C. § 343. A debtor in chapter 13 can provide for car and mortgage payments in the plan and the creditor may be required to accept these payments instead of foreclosure or repossession. You must make your house and/or car payments throughout the 3-5 year period or you must foreclose or sell.
You repay at least 50% of your debts, in some cases 100%, if a payment is missed. Chapter 13 remains on your credit report shorter than a Chapter 7 and some debts can be discharged in a 13 but not under chapter 7. Chapter 13 bankruptcy may stay in your credit file for up to ten years after you file, although it is rarely reported for more than seven years. Credit grantors are free to consider this in deciding whether to extend credit. Some lenders may extend credit only after a number of years have passed or when the filing is off the credit report.
The majority of debtors never finish their Chapter 13 repayment plans. Although most people filing assume they'll complete their plan, only about one third of all debtors do.
In some cases filing is necessary. However, as you can see from the chapter 13 information presented, it should be avoided at all costs. A qualified debt reduction company can reduce your debts to a manageable level so you don't have to proceed with bankruptcy. Click here for a free consultation from Knockout Debt. |