From a legal perspective:
Chapter 13 bankruptcy filings are typically permitted for individuals. In 2005, the bankruptcy law was modified and the application review process was made more rigorous. This has been done to ensure that the bankruptcy law benefits only those who are truly in a financial bind. The attorney representing the individual must file the application with greater care. Chapter 7 applications may only be lodged if the individual's income exceeds the state's median income. If not, the individual will be required to petition under Chapter 13.
13th Chapter:
Typically, when Chapter 13 applications are filed, the court will allow between three and five years to repay debts. This is only to ensure that the individual will make every effort to liquidate his assets or locate suitable means to raise the necessary funds to pay off the debt. During this period, creditors are prohibited from making unnecessary contact with the debtor. Therefore, the debtor has time to reflect and act.
Utilizations of the revised Bankruptcy Act:
The Bankruptcy Act as amended in 2005 seeks to reduce the number of frivolous court applications. This is intended to assist only genuine applicants who are in dire financial straits. The attorney must advise his client about the advantages and disadvantages of filing under Chapter 13 of the Amended Bankruptcy Act.""
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