Chapter 13 Bankruptcy Is Sometimes Misunderstood

Chapter 13 Bankruptcy Is Sometimes Misunderstood "As the smoke continues to clear from the 2007 real estate collapse, it is believed that a second surge of option arms will still strike. No one knows what additional harm this will cause to an already struggling real estate industry. Numerous individuals who took out a second mortgage on their property and recently faced foreclosure are at risk of being pursued by the second trust deed holder for the amount owed. If the lender so chooses, the debt can be sold to a debt collection agency that will prosecute the debtor and obtain a judgment against them. Or, file a 1099C with the IRS to write off the debt, thereby rendering the debtor liable for income taxes on the amount written off.If a person has already lost their property, it may be prudent to file for Chapter 7 bankruptcy and eliminate all debts. To qualify for Chapter 7 bankruptcy, you must pass the means test, which is based on your state's median income. If you do not qualify for Chapter 7 bankruptcy, you should consider Chapter 13. When most people think of bankruptcy, chapter 7 comes to mind. Chapter 7 is the most common type of bankruptcy due to the brief time required to obtain a discharge and the complete elimination of all unsecured debts.Sometimes, Chapter 13 bankruptcy is misinterpreted by debtors. Due to the 3 to 5 year payment plan, many individuals are hesitant to file for Chapter 13 bankruptcy protection. Chapter 13 has numerous advantages, particularly if you are attempting to protect your property. When a debtor registers for Chapter 13, they can negotiate a plan of reorganization that includes catching up on past due payments. If the property's value has fallen significantly, the debtor may attempt to remove the second and third deeds and write them off as unsecured debt at the conclusion of the payment plan. In a Chapter 13 bankruptcy, secured debts in any court-ordered judgment receive payment before unsecured debts. Numerous individuals have utilized Chapter 13 to renegotiate their mortgage recently as a result of the housing crisis. Many of these individuals have relatively little unsecured debt, and their primary concern is their upside-down mortgage.Chapter 13 enables the debtor to essentially fight the foreclosure under the protection of a court order. It obligates the mortgage holder to pursue foreclosure in bankruptcy court and evict the debtor from the property. The most the lender can receive is the return of their property, and given the present state of the real estate market, it may be in their best interest to negotiate. Individuals who are contemplating Chapter 13 bankruptcy must retain a bankruptcy attorney in order to complete the process. It is advisable to retain an attorney with expertise in Chapter 13 proceedings. The bankruptcy attorney must negotiate with the trustee and creditors, and you will want someone in your corner who will get you the best deal possible.
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