All About Chapter 13 Bankruptcy Code

Probably a good number of consumers have heard of Chapter 7 bankruptcy but there is also another type referred as the Chapter 13 Bankruptcy code.  We will discuss what the difference is between the two, what Chapter 13 Bankruptcy is and it can affect whoever has to file.

There are several differences between Chapter 7 and Chapter 13 bankruptcy, but the major difference between these 2 is that Chapter 13 frequently allows a debtor (the individual filing for bankruptcy) to keep a quantity of assets that would otherwise be lost under the Chapter seven rules.  In most cases, you are permitted to keep your home and your car under either plan provided that your equity doesn’t exceed certain limits.  Under Chapter 7, however, you are not allowed to keep rental properties, antique collections, and things of that nature, which you could retain under Chapter 13.

As a general rule, a Chapter 13 bankruptcy code is typically filed for individuals who have a large sum of income to file under Chapter 7.  This also consists of individuals who have a lot of non-dischargeable property.

Chapter 13 Bankruptcy is for persons, or small business owners, who would like to repay their creditors but are in financial hardship.  Chapter 13 bankruptcy typically protects individuals from the collection efforts of creditors and allows those who are filing to keep their real estate and personal property.  It also offers means so that the individual could pay his or her debts by way of reduced payments.

A trustee works for both parties and will habitually come up with a 3 to 5 year payment plan which offers to pay every month which is that quantity above essential living expenses.  Debtors must have a regular income and have as a minimum some disposable income with the intention of making this work.  It is the disposable income that is used to pay back the debts.

Two big problems with Chapter 13 are that the individual filing must have a steady income and some disposable money.  For a lot of people, they basically do not have that.  If they had it, they would not be in bankruptcy to begin with.  The second issue is that the individuals who file for Chapter 13 bankruptcy protection will end up paying back more of the debt owed than those seeking protection under chapter 7 bankruptcy.  Chapter 13 will carry on your credit report but typically stays on for a lesser time than Chapter 7.  

Chapter 13 will carry on your credit report but typically stays on for a lesser time than Chapter 7.

Filing for bankruptcy is a serious matter and should not be done without first exploring all the alternatives.  In the old days individuals frequently believed that filing bankruptcy was not that big a deal.  A lot of that has changed now, however, and it might be a very big deal with regards to you getting future credit loans.

The bankruptcy laws have changed recently and anyone thinking about filing should first search for the guidance from a competent and qualified bankruptcy attorney.  These specialized bankruptcy attorneys can best guide you toward the right option that will best suit your needs.

One thing to look out for when using a qualified bankruptcy attorney, remember to ask for previous cases that the attorney has worked on and make sure you have a clear indication on their fees before proceeding and making the final decision.