Chapter 13 Bankruptcy
What is Chapter 13 Bankruptcy?
A section of the Bankruptcy Code, Chapter 13 Bankruptcy is also referred to as “mini Chapter 11". It facilitates individuals and small proprietary business owners who want to repay their creditors but are facing some financial problem. In this code, debtors generally repay something to their creditors and keep hold of their property and make payments under a plan.
Who can file a Chapter 13 Bankruptcy?
You can file Chapter 13 Bankruptcy if you have less than $250,000.00 in unsecured debt and less than $750,000.00 in secured debt. Also, these debts should be liquidated as well - they must be for a definite, fixed amount and not liable to certain terms and conditions.
Difference between a Chapter 13 and a Chapter 7 Bankruptcy
Unlike Chapter 7 Bankruptcy, the objective of Chapter 13 Bankruptcy is to help debtors to retain their assets that would be liquidated otherwise. It allows them to retain their car or home generally under either plan. Chapter 7 Bankruptcy, on the other hand, does not give people the power to keep your rental properties etc. The objective of this chapter is to discharge debtor’s existing debts and let them start afresh. It implies that when their discharge is granted they do not have to pay back the debts that were incurred prior to filing bankruptcy. However, under Chapter 13, people need to repay most or all of their debts before they can start once again.
Chapter 13 Bankruptcy provides you with a substitute to the liquidation process of Chapter 7 bankruptcy. It helps retain your property. Also, this chapter gives you a chance to payback your debts by means of reduced payments. This way you can take a new start on your financial condition and lead a peaceful life free of the worries related to debt.
What is Chapter 13?
Chapter 13 of the U.S. Bankruptcy Code allows an individual to undergo a form of bankruptcy. An individual who files for Chapter 13 undergoes court supervised financial reorganization. It provides relief to those who are going through tough economic and financial times, given that they follow the court-approved plan in letter and spirit. In the wake of economic downturn in the country, there are many who have either sought relief or intend to seek relief by filing for Chapter 13. However, not everyone may be eligible for such relief and therefore hiring Chapter 13 Bankruptcy Lawyers may be helpful.
Different types of bankruptcies
The US laws allow bankruptcies under Chapters 7, 11, 12 and 13. Each chapter has its own prerequisites, advantages and disadvantages. Only Chapter 13 Bankruptcy Lawyers may be able to tell you whether you would qualify for the relief contained in it or not. Only these qualified legal professionals may be able to list the advantages and disadvantages of seeking relief under Chapter 13. For example, in majority of the cases an applicant may be allowed to choose the chapter. It must be remembered that the applicant’s financial and economic profile plays an important role in bringing the court to a particular decision. In short, you may or may not be eligible to file for relief under Chapter 13.
Why hire Chapter 13 Bankruptcy Lawyers
As mentioned earlier, each chapter offers its own set of advantages and disadvantages. Chapter 13 Bankruptcy Lawyers may be well-versed in other chapters as well and may therefore be in a position to help you come to the right decision. In addition to counselling, the professional may also be able to help you draft the proposed plan which you need to present before the competent court. The plan needs to show in detail how the applicant intends to pay back the creditors over a time period of 3 to 5 years. One of the biggest advantages of filing for relief under Chapter 13 may be that the applicant gets to keep his/her property. One of the biggest disadvantages isthat this stays on the credit report for up to 10 years.