The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income is known as Chapter 13 bankruptcy. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
Under a Chapter 13 bankruptcy, the debtor proposes a repayment plan that calls for installment payments to creditors over three to five years. If the debtor's current monthly income averaged over the last 6 months is less than the applicable state median, the Chapter 13 plan will be for three years unless the court approves a plan lasting longer.
A Chapter 13 Plan often must last for the full 5 years if the debtor's current monthly income averaged over the last 6 months is greater than the state median. In no case can a Chapter 13 Plan be proposed that lasts longer than 5 years. Creditors are prohibited by law from starting or continuing collection activity during the time the Chapter 13 bankruptcy is active.
There are many advantages a Chapter 13 has over a Chapter 7 liquidation bankruptcy. One big advantage is that a Chapter 13 allows individuals a chance to save and keep their homes when facing a foreclosure.
Individuals can stop foreclosure proceedings by filing a Chapter 13, and they then can cure any amount owed in arrears over the life of the plan. Nonetheless, filers of Chapter 13 must make all continuing mortgage payments during the life of the bankruptcy.
Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.
Chapter 13 also provides protection for third parties who are liable with the debtor on consumer debts. This means that co-signers on loans made with the debtor can be protected from creditor actions. The Chapter 13 Plan also acts like a consolidation loan where the debtor pays the Chapter 13 trustee who then disburses the money to creditors. Thus, filers of Chapter 13 never have contact with creditors.
A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
Under a Chapter 13 bankruptcy, the debtor proposes a repayment plan that calls for installment payments to creditors over three to five years. If the debtor's current monthly income averaged over the last 6 months is less than the applicable state median, the Chapter 13 plan will be for three years unless the court approves a plan lasting longer.
A Chapter 13 Plan often must last for the full 5 years if the debtor's current monthly income averaged over the last 6 months is greater than the state median. In no case can a Chapter 13 Plan be proposed that lasts longer than 5 years. Creditors are prohibited by law from starting or continuing collection activity during the time the Chapter 13 bankruptcy is active.
There are many advantages a Chapter 13 has over a Chapter 7 liquidation bankruptcy. One big advantage is that a Chapter 13 allows individuals a chance to save and keep their homes when facing a foreclosure.
Individuals can stop foreclosure proceedings by filing a Chapter 13, and they then can cure any amount owed in arrears over the life of the plan. Nonetheless, filers of Chapter 13 must make all continuing mortgage payments during the life of the bankruptcy.
Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.
Chapter 13 also provides protection for third parties who are liable with the debtor on consumer debts. This means that co-signers on loans made with the debtor can be protected from creditor actions. The Chapter 13 Plan also acts like a consolidation loan where the debtor pays the Chapter 13 trustee who then disburses the money to creditors. Thus, filers of Chapter 13 never have contact with creditors.
About the Author:
Be sure to read Alan Alder's bankruptcy information regarding Chapter 13 in Tennessee. You can learn how to stop foreclosure in Nashville and stop other creditor actions from an experienced attorney.
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