Michael Russell asked:




Chapter 13 bankruptcy is provided for the wage earner who can use his income to pay his creditors over a specified time period. Chapter 13 is a reorganization of the debt owed to creditors with a payment schedule set up whereby the wage earner makes timely payments to the creditors over a three to five year payment period.

The court may not allow a filing of chapter 13, depending on whether or not a person’s income is sufficient to repay some or all the debt. It has to be established with the court that the income is steady income and is not too low. Thus, chapter 13 is not suited for everyone.

Also, there is a limit to the amount of debt a person is carrying to qualify for filing a chapter 13. Total secured debt must not exceed $922,975 and total unsecured debt must not be more than $307,675. Secured debt is backed up with collateral such as a home or a car; while unsecured debt is balances on credit cards, signature loans, medical bills, etc.

Before you can proceed with filing a chapter 13, you are required to complete a course in personal financial management. This credit counseling course has to be approved by the court trustee. There is a fee for this course, but if you are unable to pay, you will receive the counseling free of charge.
The court will determine how much of your debt you will repay and you must begin those payments within thirty days after filing. These payments are usually made to the bankruptcy trustee to be forwarded on your creditors. The court may require these monthly payments be automatically deducted from your wages and sent to the trustee. Three percent to ten percent of each monthly payment is collected by the trustee as their commission. It is absolutely imperative that these monthly payments be paid and be paid on time.

Under chapter 13, there are certain debts that must be paid in full. These include child support, alimony and some tax obligations. These debts are non-dischargeable and must be paid one-hundred percent.

Bankruptcy law is a federal law; however, there are state laws pertaining to bankruptcy, so specific rules governing bankruptcy depends on the state of residence and filing.

The purpose of chapter 13 is to give a person a chance for a fresh start financially. It gives them protection from creditors by placing a hold on all asset and debt collections and provides the court time to work out a legal judgment that is accepted by all parties. However, there are consequences of bankruptcy in the form of poor credit and having to pay higher interest rates because of the bankruptcy on the credit report. Thus, bankruptcy filing should be thought through seriously and advice should be sought through an attorney.

There are alternatives to bankruptcy such as debt consolidation, out of court settlements or to just simply do nothing. If you have little income and property, then you are ’sue-proof’, which means if anyone were to sue you, they wouldn’t be able to collect anything anyway because you have nothing they can take. The law provides they cannot take your basic necessities such as clothing, food, household furnishings, etc. Most creditors will not bother suing someone knowing there is nothing for them to get. Instead, they will write off the debt, which does go on your credit report, but will be removed after seven years.

It’s important to weigh your options before making a final decision on whether to file a bankruptcy.

http://www.zimbio.com/chapter13bankruptcynow35/articles/3/Chapter+Thirteen+Bankrupcy+Rules

Jon Arnold asked:




Only a few years ago, Congress made multiple huge changes to the bankruptcy laws which impacted how bankruptcy would be filed, and even who is eligible. For example, no longer can you file bankruptcy just because you are tired of paying your bills, but with the new laws, there is a defined set of procedures that must be followed for each chapter being filed, and your financial status will be evaluated under a microscope, where you must be approved before you can even file.

But one of the areas that was left pretty much untouched by the wide range of changes was Chapter 13 Bankruptcy. This chapter was originally constructed to prevent a home from being put on the foreclosure block. But with the massive number of foreclosures that are happening in the US today, it is unfortunate that many people still do not know that Chapter 13 Bankruptcy filing can still be used to prevent foreclosure on their home.

For the average consumer, there are three different types or chapters of bankruptcy that may be available to them, depending on their specific circumstances. The first one is Chapter 7 Bankruptcy, which is the most common type and is also sometimes referred to as a liquidation. Obviously the reason it is known as liquidation is because most of their debt is discharged by allowing the court-appointed trustee to liquidate all of their non-exempt assets. Even with this chapter, however, be aware that there are certain types of debts that cannot be discharged by going bankrupt.
Although it used more appropriate to be used by either businesses or people with substantial assets and income, another type of bankruptcy available to the consumer is Chapter 11, frequently also known as a business reorganization. This type does not wipe out debts, but rather it allows the person or business to reorganize its debt structure and make revised payments to the creditors, sometimes over a longer period of time, and sometimes also with a reduced interest rate. Creditors usually are willing to do this, since collecting their money over time and with interest is certainly better in their eyes than to have the debt wiped out completely via a different chapter.

The last type or chapter of bankruptcy available to the consumer is Chapter 13, frequently also known as the Wage Earner’s Reorganization. This type is the least expensive to file and is typically used by consumers who still maintain their ability to make their payment obligations, usually within three to five years. The total value of their assets which are classified as non-exempt is used as a basis and guideline for the amount that needs to be repaid over this period of time, as well as considering their level of income and any debts which cannot be discharged.

But what many consumers do not realize is that Chapter 13 Bankruptcy also allows property owners to stop foreclosure proceedings if they are behind on their mortgage payments. While the same can be said for the other chapters of consumer bankruptcy, Chapter 13 is particularly designed to permit the consumer to pay the delinquency in equal monthly payments for as long a period of time as 60 months (5 years). The mortgage lender has no choice but to agree to this, as long as all the other requirements and qualifications of this chapter are met.

The procedure to be qualified to file this chapter is more stringent than the others, since it involves a thorough examination of total debt and total income. No chapter of bankruptcy is any longer consider to be a “do-it-yourself” process with all the new legal requirements in place, so regardless of what chapter you are thinking about, it is strongly recommended that you consult with a qualified bankruptcy lawyer and ensure that both you and your property, combined with your specific situation, actually do qualify.

The biggest benefit that you can have with Chapter 13 bankruptcy, if you qualify and if you are facing foreclosure proceedings, is that it buys you time. That time can be used to make your current financial situation better, or it can also be used to find the right buyer for your property. If you move forward with this, keep in mind that the time you are granted with this is finite, and you need to start planning and take action NOW.

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