Chapter 13 Bankruptcy allows a person to restructure their budget so they can begin paying off some of their debts to creditors. This is also called "reorganization bankruptcy" or "restructuring bankruptcy." With a Chapter 13 filing, the debtor can pay a percentage of some of their debts. Some debts may be discharged, while other debts must be paid off in full. This all depends on a variety of conditions and factors like:
The difference is, at first, simple:
An individual's debts are not discharged under Chapter 13 bankruptcy, but rather, the individual may lower his debt payments to affordable levels. He will then have a certain period of time to pay off his debt. The plan for getting out of debt is formalized and approved by the bankruptcy court. Some unsecured debt (debt that is not collateralized) may be discharged. However, if you owe more than $250,000 in unsecured debt and more than $750,000 in secured debt, you cannot reorganize under Chapter 13; you must do so under Chapter 11. To file for Chapter 13, you must have regular income and debts under those levels.
If you're not sure if you should file for Chapter 7, Chapter 11, or Chapter 13, then read more about it here:
You should file for Chapter 13 Bankruptcy if:
There are some cons that occur with a Chapter 13 bankruptcy, including:
When filing for Chapter 13 Bankruptcy, you should be aware of some other aspects of the filing. These can often be beneficial for the debtor. For instance, filing under chapter 13 creates an "automatic stay" on any debt collection efforts. This means that your creditors can’t collect debts from you while the Chapter 13 process is being completed. Some other important elements of Chapter 13 bankruptcy include:
Sometimes the court will force a debtor to change their bankruptcy filing from Chapter 7 to Chapter 13 or Chapter 13 to Chapter 7. This is called forced conversion and usually applies in situations where the person files for chapter 7 bankruptcy but has enough money to repay creditors.
Chapter 13 bankruptcy can be a complex process that involves many different factors. The process can also involve many different parties, such as creditors, mortgagors, and other parties. You may wish to hire a lawyer if you need advice regarding bankruptcy proceedings. Your attorney can provide you with legal guidance and can inform you of your rights. Also, your lawyer can be available to represent you during the formal hearings before a judge.
Last Modified: 10-20-2017 01:30 PM PDTLaw Library Disclaimer
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