Chapter 13 Bankruptcy

Chapter 13 bankruptcy is gaining in popularity, even though it does not cause a complete disbursal of past debts. If you are struggling to pay off your debts and are being harassed by creditors on a constant basis, this may be the right decision for you to make. Before you consider filing for Chapter 13 bankruptcy, it is important to understand what it is, how it works and why it is a viable solution for those deep in debt.

What is Chapter 13 Bankruptcy?

This form of bankruptcy sets up a payment plan that satisfies past and present financial obligations. Instead of having to deal with obnoxious creditors, you can structure a payment plan through the court system that will allow you to repay your debts in a timely fashion. Unlike Chapter 7 bankruptcy, this form protects co-signers on loans to some degree, ensuring that they will not be held responsible for the loan when bankruptcy is filed.

How Chapter 13 Works

Once you file for Chapter 13 bankruptcy, an order is issued to creditors to stay. This means that they cannot proceed in any further collections attempts. In the event that foreclosure on a home is imminent, filing for this type of bankruptcy is one of the quickest ways to save your home. While you must continue making mortgage payments, your home will no longer be at risk for foreclosure.

Who is Eligible?

There are some set guidelines in place for this type of bankruptcy. Unsecured debts must total less than $336,000. Secured debts must total less than $1,010,650. Only individuals are eligible for this type of bankruptcy. Corporations and business partnerships must use another form if they are stressed by debts and unable to pay. There are some restrictions on filing this type of bankruptcy with the court. If the debtor filed another request for bankruptcy within 180 days and did not appear in court, they are not eligible for Chapter 13.

What You Need to File

In order to file for Chapter 13 bankruptcy, you will need to prepare some documents ahead of time. This includes:

  1. A list of all current creditors and the amount you owe to each one
  2. Your current income, including any alimony or pension payments
  3. A list of your monthly expenses, completely itemized
  4. An itemized list of all the property that you own

Stopping Creditors

As mentioned previously, filing for Chapter 13 bankruptcy puts a halt to all collections efforts. In addition, it prevents creditors from placing a lien or seizing any of your assets. It is ideal for those who are financially stressed and in danger of losing their homes, cars or any other assets or property.

What You Need to Know

Filing for Chapter 13 bankruptcy may be your best bet, but it is important to file armed with the correct knowledge. A qualified attorney focusing in this form of bankruptcy will be able to advise you on the best course of action. Since there can be severe legal and financial implications when you file for bankruptcy, it is vital to have the information you need ahead of time.

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