What Is Chapter 13 Bankruptcy

Jan 31st, 2014 | By | Category: Debt

Filing a Chapter 7 Bankruptcy is the most frequent type of bankruptcy proceeding. It is sometimes called “straight" or “liquidation" bankruptcy. Filing a Chapter 7 Bankruptcy eliminates most kinds of unsecured debt. Some examples are credit cards, medical bills, most personal loans, judgments resulting from car accidents, and deficiencies on repossessed vehicles.

Consumer filings dropped sharply after Congress overhauled bankruptcy laws in 2005 but have been on the rise since 2006. In 2005, Congress overhauled the nation’s bankruptcy laws with the intention of limiting the ability of many individuals to get rid of their debt — especially through the use of Chapter 7 of the bankruptcy code. But in this faltering economy, the law’s impact has been limited. Bankruptcy is never pretty, but it does provide a fresh start for individuals like Linda …


In a Chapter 7 Bankruptcy lawyers prepare a request for you. This will list all of your assets (what you own) and all of your debts (the creditors). A Bankruptcy lawyer will file this with the Bankruptcy Court. The Court will notify all of your creditors that you’ve filed. The Court will also appoint a Chapter 7 Bankruptcy trustee to oversee your bankruptcy. You will have to be present at a meeting with the trustee. Your lawyer will also go with you to this meeting to make certain that it goes as smoothly as possible. Usually, you’ll not have to attend any other hearings, just this one. You will have about a month notice before your meeting so you’ll be in a position to take off work if you require to.

In the same vein as the previous paragraph…

The court will normally issue a discharge in your case about 70 days after your meeting with the trustee. Once you receive the discharge, you’ll know that the dischargeable debts are gone forever. A bankruptcy proceeding is a complex process. You need an experienced bankruptcy attorney to guide you through it.

Nets Incorporated has filed for Chapter 11 bankruptcy protection and is laying off most of its 200 employees, the company said today. And in a memo to employees, Manzi said that in recent weeks he alone has funded the company at a cost of around $500,000 a week. He noted in his memo that he had managed to arrange substantial commitments from some long-term investors in Japan, but that was not going to be enough to build from its existing base.


The length of time required to complete a bankruptcy depends upon the kind of case filed. In a typical Chapter 7 bankruptcy case, a discharge will granted after the time period allowed for challenging the discharge has elapses, usually sixty days of the first target date for the 341 meeting. This usually means a discharge is granted about four months of the petition for bankruptcy is filed. In a Chapter 13 bankruptcy case, because the bankruptcy plan is usually anywhere from three to five years, the discharge is granted after the plan has been completed.

The Chapter 7 trustee is nominated by the government to oversee your case. The main goals of the Chapter 7 trustee are to make certain that the forms are filled out correctly and to see if there is fraud on the part of the debtors. The Chapter 7 trustee will also check to find out if you have the proper protections to keep all of your property. If you don’t have the proper protection then a Chapter 7 trustee has the right to take those unprotected items and sell them. If the case is filed with a reputable law firm, then one doesn’t have to disclose their property to them and then surprisingly lose it to a trustee. The protection laws can be quite complex. However, a good lawyer has the experience to assist you through the maze and to safeguard your personal treasures.

Your debts are restructured to allow you to pay off your creditors with your future earnings under a Chapter 13 Bankruptcy proceeding. A Chapter 13 Bankruptcy Plan will be devised for you to repay your creditors. You will pay them off, commonly with no interest, over a span of three to five years. The monthly payment is based in part on your income and your capacity to pay. The creditors will be paid off at different rates depending on your case. Depending on your income you’ll be held responsible for all or just a part of your debts. In some cases the Chapter 13 trustee will pay the creditors as little as 10 percent of the amount you owe. Once the Chapter 13 Bankruptcy is complete the unsecured creditors can never ask for any more.

In a Chapter 13 Bankruptcy you’ll make one payment to a Chapter 13 trustee. The trustee will use that money to pay all of your creditors. This will give you one easy payment to make each month. The goal of the Chapter 13 Bankruptcy is to bring you a reasonable payment that will put you back on the right track and i’ll give you a set date when you know you’ll be out of debt.

The Chapter 13 trustee is hired by the Federal Government. The Chapter 13 Bankruptcy trustee collects money from debtors who’ve been approved for a Chapter 13 Bankruptcy restructuring plan and distributes the payments to the creditors.

Bankruptcy can help you take your life back. You may have seen advertisements for companies that do "debt consolidation”. A Chapter 13 Bankruptcy is very different. The private "debt consolidators" try to get your creditors to agree to a repayment plan. The creditors have no obligation to cooperate with these private companies. If the private companies are late making a payment on your behalf, or if a payment gets lost in the mail, the creditors can charge you penalties and late fees. This means that if you use a private debt consolidator you could end up owing more money than when you started. In contrast, if the creditors are compensated through a Chapter 13 Bankruptcy plan then they may not charge for late fees or penalties.

A Chapter 13 Bankruptcy is a procedure administered by authority of the Federal Government. It isn’t a negotiation with the creditors. They are forced to take payments offered by the plan. If the creditors don’t comply or if they do not file their paperwork to be part of the Chapter 13 Bankruptcy then they get nothing. The Chapter 13 Bankruptcy Court doesn’t beg the creditors to participate. The Chapter 13 Bankruptcy will dictate to the creditors what they’ll get.

A Chapter 7 Bankruptcy will get rid of all of your debts in one procedure. A Chapter 13 Bankruptcy will force your debts into a repayment plan. Why should you choose a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy? A Chapter 7 Bankruptcy is probably better if you are eligible for it. The problem is that not everyone qualified for a Chapter 7 Bankruptcy.

In order to see if you qualify for a Chapter 7 Bankruptcy the Court will look at your income (what you make) and your assets (what you own). If your income is unusually high then the Court may not enable you to file for a Chapter 7 Bankruptcy. In order to see if your income is too great they’ll see your household income for the prior six months. They will then compare that income to the average income for a family of your size. They will also take into consideration any special expenses you have, such as child support, school, and medical expenses.

In determining if a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy is right for you, your Bankruptcy lawyer will also need to consider your assets. In a Chapter 7 Bankruptcy you can usually keep your house, cars and personal goods. However, there are limits to this. If you have a great deal of equity in your home (I.e. If you could sell it for a very high profit) or if you’re very valuable personal goods, you may wish to file a Chapter 13 Bankruptcy. Under a Chapter 13 Bankruptcy your possessions are protected no matter how much they’re worth. Even very expensive assets can be kept under a Chapter 13 Bankruptcy.

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