Bankruptcy Chapters Requesting Loans

The purpose behind Chapter 13 Bankruptcy filing is rehabilitation of the debtor. Meaning you are given the opportunity to repay some or all of your debts.but under generally better terms (lower or no interest). Rather than having to liquidate assets to pay off debts, this process is designed to allow the debtor to use future income to pay off creditors. Chapter 13 Bankruptcy is basically an adjustment or reduction of debts for a debtor with regular income.

The United States Bankruptcy Code provides the debtor an opportunity to pay back their creditors over a period of time of up to five years. This process is completely supervised by the court. Your attorney will ensure that your interests will be protected.

Chapter 13 Bankruptcy allows the debtor to keep all of their property. However, an interest-free plan for repayment must be developed and approved by the court. The debtor begins to make payments within thirty to forty five days after the case has begun. Unlike Chapter 7 Bankruptcy, the payments are made to the trustee who will then pay the appropriate creditors. Chapter 13 Bankruptcy prevents creditors from collecting from the debtor. The creditors are required by law to follow strictly the terms of the repayment plan. Your attorney will prepare this payment plan.

After the repayment plan is filed the debtor’s creditors will have an opportunity to object to the proposed plan. This process is called a confirmation hearing which is heard before a judge. The attorney will appear before the judge on behalf of the debtor. The judge will confirm the plan if the debtor is current with their payments and if the trustee and any creditor problems are resolved. After the plan is confirmed, if the debtor simply makes all the required monthly payments, then they will receive their discharge.

This whole process is very complicated and recommended the debtor has the advice of a good attorney.

In order to file Chapter 13 the debtor must be able to pay monthly living expenses and pay the trustee to consolidate the debt. In order to make these payments the debtor must have a consistent source of income or at least reasonable prospects of future income. Just like in a Chapter 7 Bankruptcy, the individual must live, reside, be domicile, or have a place of business in the United States. Additional, the debtor must have a regular source of income and the amount of their debt may not exceed a certain amount.

What does it mean to have a regular source of income? According to the Bankruptcy Code, “any individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13 Bankruptcy.” is considered to have a regular source of income.

Although the limits of debt will not apply to most citizens, (the limits are extremely high), it is noteworthy to know the figures. The amounts of debt are different every year. The amount is based on and subject to the inflation adjustment provided in the Bankruptcy Code. Consulting an attorney is the best way to know if you are eligible for Chapter 13 bankruptcy.

If you meet all of the requirements listed above and you are tired of the daily harassment from creditors Chapter 13 may be the answer.

Original content from http://www.bankruptcyhome.com You can e-mail us here.

According to the American Bankruptcy Institute “household debt is at a record high relative to disposable income.” The Administrative Office of the U.S. Courts reported that the number of filings for the year ended March 31, 2003 “exceeded 1.6 million for the first time in any 12 month period,” a 15.1 percent increase from the previous year.

There are two basic types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 Bankruptcy and Chapter 13 are legal proceedings that are available to a person to cope with a financial crisis. Personal bankruptcy must be filed in a federal bankruptcy court. You will have to pay about $160.00 in court fees. Attorney fees are additional.

Chapter 7 bankruptcy involves the liquidation of all your assets that are not exempt from the bankruptcy settlement. Exempt property may include automobiles, some household furnishings, and property needed for work-related use; for example if you were a mechanic the tools you use to perform your work would be exempt from the bankruptcy settlement. Exemption amounts vary from state to state.

Under this plan the court appoints a trustee to handle the liquidation of your non-exempt property. The trustee can sell or turn over your property to your creditors. The court discharges your debts and you are now debt-free. You are allowed by law to file a Chapter 7 bankruptcy once every six years.

A Chapter 13 bankruptcy allows you to keep property, like a mortgaged house (provided there are no liens on it) or a car, as long as you have a steady income. A Chapter 13 bankruptcy is a court-ordered and approved repayment plan to your creditors. This plan allows you to use your future income to pay back your debts over a 3-to-5 year period without surrendering any property. Once you complete payments under the plan, your debts are discharged by the court.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both provide exemptions that allow people to keep certain assets, although exemption amounts vary. A bankruptcy will not erase most child support, alimony, fines, taxes and some types of student loans.

Financial experts agree that a bankruptcy should always be the last resort used for managing your debts. Bankruptcy has long lasting results. A bankruptcy remains on your credit report for a period of 10 years, making it more difficult to obtain credit in the future. You should also know that although your bankruptcy disappears from your credit report after 10 years, you may still be asked by future employers or lenders if you have “ever” filed for bankruptcy.

Disclaimer: The information contained in this article is for informational purposes only. The author is not herein engaged in rendering legal, insolvency, tax, or other professional advice and services.

© 2004, www.yourfreecreditreportnow.com
Author: James H. Dimmitt.
Get your FREE credit report online now and subscribe to our FREE weekly newsletter for consumers, “TO YOUR CREDIT”. Visit http://tinyurl.com/bgo9 for details.