Chapter 13 An Affordable Payment Plan

Bankruptcy Law Chapter 13 An important feature applicable to all types of bankruptcy filings is the automatic stay. Automatic stay means that the mere filing for bankruptcy protection automatically stops and stops most lawsuits, liens, foreclosures, evictions, liens, liens, utility outages, and debt collection activities.

Under Chapter 13, the debtor proposes a plan to pay his creditors over a period of 3 to 5 years. This written plan details all the transactions (and their duration) that will occur, and payment under the plan must begin within thirty to forty-five days of the start of the case. During this period, your creditors cannot attempt to collect the debt previously incurred by the individual, except through bankruptcy court. In general, the individual can keep their property and their creditors end up with less money than they are owed.

In Chapter 13, the debtor retains ownership and possession of all of his assets, but must dedicate a portion of his future income to repaying creditors, usually over a period of three to five years. The amount of the payment and the period of the payment plan depend on a variety of factors, including the value of the debtor’s property and the amount of the debtor’s income and expenses. Secured creditors may be entitled to a higher payment than unsecured creditors.

Relief under Chapter 13 is available only to people with regular income whose debts do not exceed prescribed limits. If you are an individual or sole proprietor, you can file for Chapter 13 bankruptcy to pay off all or part of your debts. In this chapter, you can propose a payment plan in which you pay your creditors over a period of three to five years. If your monthly income is less than the state median income, your plan will be for three years, unless the court finds “good cause” to extend the plan for a longer period. If your monthly income is higher than the median income for your state, the plan generally must be for five years. A plan cannot exceed the five-year limit.

A bankruptcy exemption defines the property that a debtor can retain and preserve through bankruptcy. Certain real and personal property may be exempted on “Schedule C” of a debtor’s bankruptcy forms and, in fact, may be taken out of the debtor’s bankruptcy estate. Bankruptcy exemptions are available only to people who file bankruptcy. There are two alternative systems that can be used to “exempt” property from a bankrupt estate, the federal exemptions (available in some states, but not all) and the state exemptions (which vary widely from state to state).

The advantages of Chapter 13 over Chapter 7 is to stop all foreclosures and reinstate an ‘accelerated’ mortgage when the bankruptcy plan is fulfilled. Certain debts that are not dischargeable under Chapter 7 may be discharged under Chapter 13. Collection activities against co-debtors who do not declare can also be stopped entirely during the life of the case.

One of the main disadvantages of filing for Chapter 13 is that the record stays on the person’s credit report for 10 years. During the life of the case, the debtor must obtain permission from the Chapter 13 Trustee to request any additional credit. These factors tend to discourage most creditors from lending money to these people.

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