In contrast to Chapter 7 bankruptcy, Chapter 13 bankruptcy does not involve the liquidation of all of the debtor's assets. This bankruptcy procedure is essentially a reorganization of unpaid debts for up to five years. This is accomplished through the direct control and supervision of the court.
Chapter 13 bankruptcy allows the debtors to retain their property. There is merely a court-supervised process for interest-free debt repayment. This is governed by a repayment plan that outlines the specifics of the repayment, such as the types of transactions and payment schedule.
The plan requires the debtor to repay creditors approximately thirty to forty-five days after the case commences. There will be no court-appointed trustee, as there is in Chapter 7 bankruptcy. Therefore, the payment will be made directly to the creditors.
However, in some cases the repayment plan will involve a trustee who oversees the distribution of funds to creditors in accordance with the plan. It is prohibited for creditors to collect payments beyond the terms stipulated in the repayment plan. It is advisable to obtain the assistance of an attorney when preparing a suitable repayment plan.
In comparison to Chapter 7 bankruptcy, Chapter 13 bankruptcy offers two advantages. Chapter 13 allows the debtor to choose a full discharge upon complete payment of all debts. However, there are exceptions to this option, which you can discuss with your attorney if necessary. Another benefit is that the repayment plan can be implemented with or without the creditor's approval. What is required is the court's approval of this plan. However, creditors are permitted to object to this plan to ensure equitable treatment between the parties.
Those who are eligible to file for Chapter 13 bankruptcy are those who are routinely employed and receive a monthly income. Additional requirements must be met in order to file for Chapter 13 bankruptcy. Your attorney should be consulted regarding these requirements.
There are specific requirements for initiating a Chapter 13 bankruptcy.
Consider Chapter 13 bankruptcy carefully to determine if it is the best solution to your problems.
2. Create a budget that details your obligations and payments.
Determine if a Chapter 13 bankruptcy is necessary if you owe a variety of creditors different amounts of money.
4. Manage secured creditors in accordance with your implementation strategy.
5. Develop a Chapter 13 plan and initiate the process of submitting the required documents.
Pay your court fees, such as the petition fee.
7. It is advisable to attend court-ordered meetings with creditors, the court, and others whenever your presence is required.
After paying off your debts in complete, you must obtain a discharge and terminate your repayment plan.
If you have additional concerns, you should seek the counsel of an attorney. Filing for bankruptcy is not a simple choice, so it is advisable to seek professional advice before deciding on a future course of action.
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