Introduction to Chapter 13 Bankruptcy
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The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income is known as Chapter 13 bankruptcy. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
Under a Chapter 13 bankruptcy, the debtor proposes a repayment plan that calls for installment payments to creditors over three to five years. If the debtor's current monthly income averaged over the last 6 months is less than the applicable state median, the Chapter 13 plan will be for three years unless the court approves a plan lasting longer.
If the debtor's current monthly income is greater than the applicable state median, the bankruptcy plan generally must be for five years. In no case may a Chapter 13 plan provide for payments over a period longer than five years. During this time the law forbids creditors from starting or continuing collection efforts.
A Chapter 13 bankruptcy offers many advantages to individuals that you cannot find in a liquidation under Chapter 7 bankruptcy. One key advantage is that Chapter 13 allows to individuals to keep their homes when faced with a foreclosure.
By filing a Chapter 13 bankruptcy an individual stops foreclosure proceedings, and can then make payments over the life of the plan that cure past-due delinquent payments. However, the Chapter 13 filer must still make the regular monthly mortgage payments while the Chapter 13 is active.
Another advantage Chapter 13 has over Chapter 7 is that secured debts (other than a home) can be crammed-down or rescheduled and extended over the life of the bankruptcy. This often means substantially lower monthly payments.
There is also a special provision in Chapter 13 bankruptcy which allows for protection of third parties who are liable with the debtor on consumer debts. This provision is often used to protect co-signers on loans made with the debtor. The Chapter 13 also acts like a consolidation loan where the individual makes plan payments to the Chapter 13 trustee who in turn distributes the payments to creditors. Individuals do not have to deal with creditors while in Chapter 13.
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
Under a Chapter 13 bankruptcy, the debtor proposes a repayment plan that calls for installment payments to creditors over three to five years. If the debtor's current monthly income averaged over the last 6 months is less than the applicable state median, the Chapter 13 plan will be for three years unless the court approves a plan lasting longer.
If the debtor's current monthly income is greater than the applicable state median, the bankruptcy plan generally must be for five years. In no case may a Chapter 13 plan provide for payments over a period longer than five years. During this time the law forbids creditors from starting or continuing collection efforts.
A Chapter 13 bankruptcy offers many advantages to individuals that you cannot find in a liquidation under Chapter 7 bankruptcy. One key advantage is that Chapter 13 allows to individuals to keep their homes when faced with a foreclosure.
By filing a Chapter 13 bankruptcy an individual stops foreclosure proceedings, and can then make payments over the life of the plan that cure past-due delinquent payments. However, the Chapter 13 filer must still make the regular monthly mortgage payments while the Chapter 13 is active.
Another advantage Chapter 13 has over Chapter 7 is that secured debts (other than a home) can be crammed-down or rescheduled and extended over the life of the bankruptcy. This often means substantially lower monthly payments.
There is also a special provision in Chapter 13 bankruptcy which allows for protection of third parties who are liable with the debtor on consumer debts. This provision is often used to protect co-signers on loans made with the debtor. The Chapter 13 also acts like a consolidation loan where the individual makes plan payments to the Chapter 13 trustee who in turn distributes the payments to creditors. Individuals do not have to deal with creditors while in Chapter 13.
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Be sure to read Alan Alder's bankruptcy information concerning Chapter 13 in Murfreesboro. You can find out how to stop foreclosure in Nashville and stop other creditor actions from an experienced attorney.
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