What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is enough to pay their reasonable expenses with some amount left over to pay off their debts. WILL MY SPOUSE BE AFFECTED? It is not always necessary for both spouses to file bankruptcy. The question that must be asked is whether both spouses are responsible for the debt that is being sought to be discharged. Under current law debts are divided into separate and marital obligations. You are not responsible for the separate debts of your spouse. However, you may be responsible for the martial debts incurred by them even though you did not sign the contract. Thus if your spouse has an obligation for food, clothing, shelter, u
In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, this process involves restructuring debts which allows the debtor to use whatever income they may have in the future to pay off the creditors. Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income, and thus can afford to request for such adjustments or reductions. The United States Bankruptcy Code gives the debtor a ceiling of 5 years, within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
Chapter 13 allows individuals with regular incomes to pay a portion of their debts under a court-approved payment plan and keep both their exempt and nonexempt assets. If you have a steady income, Chapter 13 allows you to pay all or a portion of your debts under the protection and supervision of the U.S. Bankruptcy Court. The law requires that your payments to creditors be no less than they would have been if you had filed a Chapter 7 case. Under Chapter 13, you will keep all your assets (both exempt and nonexempt) while the plan is in effect and after you have successfully completed it.
Chapter 13 Bankruptcy is an interest-free debt repayment plan through which you consolidate your debts and make a payment on your debt over a 3 to 5 year period. In a Chapter 13 debt repayment plan the creditors cannot collect from you and the creditors are required by Federal Court order to adhere to the terms of the plan.
