Chapter 13 Bankruptcy: Reasons to File

Chapter 13 Bankruptcy: Reasons to File "A Chapter 13 bankruptcy is filed by a person or business that does not wish to liquidate in order to repay their obligations. Instead, it is a reorganization of debt that allows the company to avoid liquidation in order to satisfy its debt obligations. Chapter 7 bankruptcy, on the other hand, enables the business to sell its assets to pay its creditors. Consequently, any remaining debt is forgiven, leaving the business or individual with a ""clean slate."" A chapter 13 bankruptcy has the same effect on a person's credit rating as a chapter 7 bankruptcy, but it is expunged from a person's credit report in five years instead of the standard seven. The purpose of this form of bankruptcy is to allow a struggling business to meet its financial obligations, particularly if they anticipate a short-term financial recovery and still have an income source.For both forms of bankruptcy, the individual or business must file a bankruptcy petition with the court. Therefore, it is essential to have legal representation if you are contemplating bankruptcy. In many situations, these debts can be settled without court intervention. Additionally, it is essential to know which filing option is ideal for you or your business, which is impossible without legal counsel. In addition, numerous modifications to bankruptcy law necessitate the assistance of a trained professional to navigate the necessary paperwork and filings. Numerous individuals have had their bankruptcy cases dismissed because they did not comprehend how to fulfill certain filing requirements.A bankruptcy attorney can assist the debtor in drafting a three to five year repayment plan for court approval. This plan must be comprehensive and include all debts owed as well as any expected transactions and income during the restructuring period. Once chapter 13 bankruptcy is approved, a federal bankruptcy court will oversee the debt restructuring. This means the court must grant written permission for the business or individual to obtain a new credit line.Chapter 13 bankruptcy has a number of additional advantages over other varieties. Once a payment plan has been approved, for instance, creditors are prohibited from contacting the debtor about their debts except through the bankruptcy court. Additionally, while the case is pending in bankruptcy court, the court can suspend foreclosure proceedings. Chapter 13 bankruptcy enables businesses to continue operations and allows individuals to regain financial control without selling assets.
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