Do You Understand The Rules Of Chapter 13 Bankruptcy

Bankruptcy consists of numerous layers and chapters. There is chapter 13 bankruptcy that is significantly known as reorganization bankruptcy. Individuals and unincorporated business may qualify for chapter 13 bankruptcy. Filing for chapter 13 makes it so that the person filing for it will be able to have their financial debt restructured and organized into a plan but will be supervised and also approved by the bankruptcy court. There is a time limit given with chapter 13 bankruptcy. This time limit normally ranges anywhere to between three to five years for the person to be able to repay their financial debt. After chapter 13 bankruptcy has been filed for the phone calls and harassment form the credit card companies and creditors will not be able to contact you about your payments or start collecting that will go against you.

Chapter 13 bankruptcy and chapter 7 bankruptcy are significantly different. In chapter 7 bankruptcy all of a person's financial debt is erased. In this erasing of financial debt however all of their assets will be acquired in order to pay off the debt the person owes. Comparing these two chapters of bankruptcy, in chapter 13 bankruptcy the debt you owe remains and becomes reorganized. In using this chapter of bankruptcy compared to chapter 7, you will not have to submit all of your assets and you will be able to maintain them.


Many people view chapter 13 bankruptcy has a debt consolidation loan. Chapter 13 bankruptcy is completely not a loan under any circumstances. The financial debt that you have will stay but will be reorganized and placed into a easier repayment plan so that you will be more able to make the monthly payments. Even though your debt still exists you will not have the contact by the creditors and credit card companies and they will be no longer able to call and harass you about making payments.

One aspect of chapter 13 bankruptcy that is different than chapter 7, is that you are able to keep your house and are not forced to foreclose. Once the bankruptcy process has begun the foreclosure procedure will end and the increasing amount of previous debts you have will be gone. Making your monthly mortgage payments must continue during the time of bankruptcy and must be paid.

If there is a substantially high amount of secured debt it may be reorganized and structured more properly so that the payments will be easier for you to make. There are some instances where the interested rate on your payments can be lowered or the extension of the term to allow for smaller monthly payments. By making this extension it will allow for the person paying the debt off to have smaller bills and be able to actually afford making it.

Individuals and unincorporated business have limitations when filing for this chapter of bankruptcy. The total amount of unsecured debt that remains must be less than $307,000. Along with that the secured debt needs to be less than $923,000. There are instances and situations where the limitations may possibly be adjusted according to the consumer price index.

To file for bankruptcy and to become eligible, credit counseling is required. The United States Trustee's office must approve the agency for the credit counseling. There may be a fee accompanied by using these services however if you cannot afford to pay for the services they will try their best to meet your financial needs and lower payments.

If you are looking to maintain your assets and have some leverage on your financial situation with less stress then chapter 13 bankruptcy may be appropriate for you. The rescheduling of your repayment plan so that making your payments will be easier for you to do. Although bankruptcy may not seem appealing it may be your best option.

By: Jay Anderson

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For more insights and additional information about Chapter 13 Bankruptcy as well as getting a free bankruptcy evaluation from a qualified lawyer local to you, please visit our web site at www.bankruptcy-data.com

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