What You Should Know about Bankruptcy Chapter 13

Bankruptcy occurs when an individual or an organization legally reveals their unfitness to resolve the payments of the creditors. In That Respect are particular laws and regulations concerning bankruptcy, and they are targeted at providing a form of protection to both the creditors and the debtors. Bankruptcy chapter 13 is a chapter which is held in the United States Bankruptcy code which can be picked out by individual filing for bankruptcy.

The Bankruptcy Code of the United States is held under Title 11 of the United States code. In this Bankruptcy code, there are particular chapters which establish several forms and positions of bankruptcy. Bankruptcy chapter 13 is also one option available to a bankrupt person.

Debtors may pick out to file the bankruptcy under Chapter 7 which would ensue in liquidation or straight bankruptcy, chapter 12 (reorganization which is similar to Chapter 13 but offers additional benefits for farmers and fishermen), Chapter 11 and Chapter 13 which is the reorganization of the business. Furthermore, in many cases the debtor can even shift to another particular chapter from chapter 7 or 11 when presented with involuntary bankruptcy.

Bankruptcy chapter 13 allows an individual to undergo financial reconstituting under the supervision of the federal bankruptcy court. Nonetheless, not every individual can file bankruptcy chapter 13 since there are specified requirements that have to be met. In order for a debtor to successfully file bankruptcy chapter 13, he/she must have a disposable income to originate a payment plan to settle the creditors. Moreover, the Bankruptcy Code has assigned debt limits for an individual to be entitled to file Chapter 13, amounting to no more than $336,900.00 in unsecured debts and $1,010,650.00 in secured debts.

Under bankruptcy chapter 13, an individual proposes a 3 to 5 year plan to resolve the creditors and the refunds should begin within thirty to forty five days after the original bankruptcy case has been filed. In plus, during this period of time, the creditors are allowed to accumulate their past debts only through the bankruptcy code. Ordinarily, the creditor will be allowed to retain his property and the creditors will be settled an amount less than the actual owed debt.

However, there are certain disadvantages of bankruptcy chapter 13 for instance; the filing for bankruptcy will stay in the individuals credit report for up to ten years and he/she cannot obtain any more credit without the approval of the bankruptcy code. In addition, creditors may not be driven to provide credit to an individual in this position.

Therefore, bankruptcy chapter 13 provides security to debtors while providing creditors a way to reclaim their money. Overall, it can be seen as a pretty great alternative particularly for debtor.

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Originally posted 2010-01-02 20:10:30. Republished by Blog Post Promoter

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