Chapter 13 And You
Individuals facing serious financial difficulties have various options, one of which is filing for bankruptcy. Choosing this option will harm your credit for several years but might still be the best way to get out of severe financial problems. United States law offers you two possibilities for filing an individual bankruptcy: Chapter 7 and Chapter 13. Here is a more detailed look at Chapter 13 bankruptcy.
Chapter 13 vs. Chapter 7
What most people consider bankruptcy, they are probably thinking about filing a Chapter 7 bankruptcy, in which all of your property is liquidated with a few exceptions. Chapter 13 is different because it allows you to keep all of your property as long as you make payments to your creditors under a plan agreed to by the bankruptcy court. It allows you to keep your creditors from suing you for your assets while you pay them over time under a settlement agreement.
Requirements to File
Not everyone will qualify for chapter 13. You must meet certain eligibility requirements. Your tax filings must be current, and the total amount of your debt cannot be over certain limits. Also, you must have enough income to both pay your expenses and meet the monthly obligations of your settlement agreement. If you cannot meet these requirements, then you will most likely need to file for bankruptcy under Chapter 7.
Repayment Plan
A key part of the Chapter 13 process is proposing a repayment plan to the bankruptcy judge, which may either be accepted or rejected. Repayment plans or settlement agreements under Chapter 13 will be for three or five years. Some debts you repay under the plan must be paid in full, while for other debts you can make partial payments, with the rest being discharged by the court.
For example, alimony, child support and tax debts must be paid in full. Also, secured debts must be paid in full if you want to keep the property. Unsecured debts such as credit card debts are typically are paid off at less than 100%, depending on your disposable income each month and other factors.
House
One of the most common reasons people file for chapter 13 is to save their house from foreclosure. Chapter 13 allows you to keep your house, but you must make your mortgage payments in full.
Filing for Chapter 13 is not something you want to do on your own. For best results, talk with an experienced bankruptcy attorney in your city. For more information, check out a website like http://www.haven-law.com/.