Basics of Chapter 13 of Bankruptcy

Chapter 13 Bankruptcy is one of the ways to reduce the debt of a person while keeping some of his valuable assets.  Bankruptcy lawyers can provide assistance in the process of handling a chapter 13 Bankruptcy quickly and in a planned manner.  This option is for people who have debt over the head and are confused on how to keep their valuable assets like their home etc, in that case chapter 13 bankruptcy is the perfect option. 

The most wonderful thing is that the person can keep his big assets, which are not covered by tax exemptions.  When this option is selected the person has to make a plan to pay back his debts over certain period of time, usually 3 -5 years time.  When choosing the Chapter 13 Bankruptcy plan the person going for it has to make payments monthly some times biweekly, hence the person should have a constant income source.  A confirmation hearing is held in the court of law, where the proposed repayment plan of the debtor is reviewed and checked if it meets the bankruptcy code.

 According to Chapter 13 Bankruptcy individual persons can keep their assets, properties and make the payments based on their earnings to pay off the creditors.  In this type of bankruptcy, the debts are not erased but enable to make appropriate payments are made and discharge received accordingly.  During the repayment period, the debtor is protected against lawsuits, garnishments and from other kinds of action by the creditors.  Debts on a larger scale are eliminated under the Chapter 13 Bankruptcy plan than any other plan.

Who are eligible to apply for Chapter 13 Bankruptcy?

It is meant for people who run small businesses and for those with a constant and steady income.  This is also for people who would like to avoid bankruptcy, as this plan helps them to pay off a portion of their debt. 

Things to be considered before filing for Chapter 13 Bankruptcy:

A debt credit counselor should be consulted who is approved to carry such tasks.  The person has to go for a course, which teaches him about financial budgeting and about money management to avoid getting into debt again.  It will be a proof to show the court that the person has learned how to make a budget plan and to make repayments.  When the repayment plan is made, it becomes a legal commitment to repay the creditors their debts.  Mostly a part of the debt amount is forgiven in case of an arranged payment plan.  Also the person do not pay the payment himself, a credit counselor represents the person as a trustee who distributes the money collected from the person to the creditors according to the agreement plan.  When the person is under the protection of the Chapter 13 Bankruptcy, he cannot ring up any debtor for money exceeding $250.

The advantages of Chapter 13 Bankruptcy:

Once the petition is filed, an automatic stay is imposed on the creditors by law to cease all activities concerned in collecting the debt from the applicant.  Chapter 13 Bankruptcy is the best solution to people who have consistent earnings; it has the advantage of retaining the ownership of the assets.  When the person enrolls in a course, it helps him to analyze what went wrong and how?  The course also educates them to protect themselves from identity thefts, to read and monitor their credit reports etc.