Understanding the Basics of Chapter 13 Bankruptcy
If you have valuable property when you declare bankruptcy, you should consider filing under Chapter 13 instead of Chapter 7 to protect yourself. We will try to point out the most important facts about Chapter 13 bankruptcy for you. Unlike Chapter 7, it does not settle all payments to creditors immediately. Instead, the debtor plans to reimburse his or her debts over a period of time, perhaps five years.
A monthly payment plan has to be worked out and the schedule is then submitted to the court.
Determining Eligibility
To be eligible for legal bankruptcy, a person needs to have secured (or mortgaged) debts of over $800,000 and unsecured debts (loans) of about $300,000. For a secured creditor, full payment will be made within 30 months of filing under Chapter 13.
Release under a similar clause is assumed to be within the past 2 years, or if under Chapters 7, 11, or 12, within the last 4 years. Debts from student loans, drunken driving penalties for injury to others, or for criminal actions are not eligible under Chapter 13.
Chapter 13 Procedural Basics
The first step in obtaining Chapter 13 information is to file a petition with the court of jurisdiction in your home district. A payment plan has to be submitted within 20 days after filing the petition. A court-appointed trustee will then mediate between creditors and debtors. A creditors' meeting is held within 40 to 60 days after the payment plan is submitted.
After considering all the facts of the case, the judge will then confirm the payment plan. It is then up to the debtor to release the funds on the dates they are due. Failure to comply with this requirement can cause denial of Chapter 13 coverage and reversion to Chapter 7 bankruptcy.
tags: bankruptcy, finance, debt
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