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Chapter 13 Bankruptcy

Chapter 13 Bankruptcy

What Exactly is Chapter 13 Bankruptcy?

When a person goes through Chapter 13 bankruptcy, they make a plan to repay their debts within a three-five year period and keep their property. This type of bankruptcy is also referred to as a wage earner’s plan. Because a debtor is enabled to keep property, this can be a much more desirable alternative to Chapter 7. One of the most important types of property saved by a Chapter 13 bankruptcy is a person’s home. Foreclosures can be stopped through this process.

This process also enables debtors to reschedule payments on other secured debts. Rescheduling debts can help a person get more workable monthly payments. Additionally, Chapter 13 bankruptcy has protections for third parties who may have been cosigners for the filer’s debts. Lastly, this process includes a trustee who receives money from the debtor and distributes the funds to creditors.

A person filing Chapter 13 bankruptcy, must compile all of the following information for review.

  • A list of all creditors, the amounts of the debt, and the nature of their claims;
  • The source, amount, and frequency of the debtor’s income;
  • A list of all of the debtor’s property; and
  • A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

There are debt ceilings that determine one’s eligibility to file Chapter 13. These ceilings are adjusted periodically based on the CPI (Consumer Price Index) but in 2009 the amounts were $336,900 for unsecured debts and $1,010,650 for secured debts.

When determining what form you want to file, it is important to consult a bankruptcy attorney like Brad Duvall. He can evaluate your situation and advise you on the pros and cons of each type of bankruptcy.

When someone completes a Chapters 13, he/she cannot file again for eight years.

You can also see “what is banckruptcy“.

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