Chapter 13 bankruptcy is basically a repayment plan that allows people to repay part of their debts using their regular income. The period for repayment ranges between three and five years, and this is determined by the court depending on the applicant's eligibility and current situation.
There are some benefits that are associated with this program and one of them is that people have the opportunity to rescue their homes from the nerve wracking foreclosure. The chapter has the power to restrain a foreclosure process.This involves the resolution of past mortgage payments that are due. It also allows individuals to repay their secured debts that might have been incurred within the period of bankruptcy.
These provisions help in lowering the monthly payments for these debts quite significantly. It is also important to note that it also protects the co-signer of these debts. The program has been designed in order to function as a consolidation loan such that the debtor is required to make payments to the trustee who is overseeing the entire process. The trustee is then required to distribute these payments to the creditors after the payment.
The process works in such a way that the debtor has no contact with the creditors and this helps in reducing financial burdens in future. It is possible for one to file for this offer without legal representation but this is only if the debtor is a legal expert in his or her own right. This is however not advised since there are some areas that are extremely complex and that would require a legal expert in this field. It is quite easy to make some misrepresentations as an individual and end up having grave legal and financial repercussions that could end up costing a lot of money.
The debtor is not required to give up assets while under this provision but there are some situations that would require one to liquidate some assets for the payment of part of the debt. It is however important to note that in most cases the debt is paid off over time through the monthly plan. The provision also allows for some exceptions to the filing in some cases.
It is important to know that there are specific debts with which can not be included in this program. These include government fines, tax debts, student loans and child support. There are others that are not covered due to their intensity, therefore, one should have this information. Filling for this kind of bankruptcy however ensures that the debtor is not harassed by creditors.
It is important to notify creditors of the filing as this is what causes the automatic stay to have its effect. This means that creditors have no right to seize any of the debtor's assets or cause any kind of discomfort. This could be in form of harassing phone calls, lawsuits, wage garnishing and many others.
The chapter 13 bankruptcy ensures that the debtor does not lose any of their qualified retirement savings, although these exemptions may differ depending on the state. It is important to consult a lawyer to know how you will be affected right from the start.
Before you file for bankruptcy, make sure you check Sam's excellent website on Filing For Chapter 13 Bankruptcy, and if you should you file for bankruptcy.
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