Guide to Chapter 13 Bankruptcy Claims
Filing a Chapter 13 bankruptcy can offer people a flexible way to file a bankruptcy. This type of bankruptcy differs very greatly from a Chapter 7 bankruptcy. Through a Chapter 13 bankruptcy, debts can be consolidated in order to create a repayment plan that allows someone to repay debt with lower or no interest. A Chapter 7 bankruptcy involves the liquidation of debts, whereas a Chapter 13 bankruptcy simply involves the restructuring of debts.
In a Chapter 13 bankruptcy, the debtors are allowed to retain ownership over their properties. A plan is created that forces the debtors to repay the debt without interest. The plan details the exact time period of when the payments should be made and the duration of the entire program.
After the case has started, the person filing the case has 30 to 45 days to start repaying the debt involved in the case. Even if creditors disagree with the plan that has been created, the repayment plan can continue legally as long as the Court has approved the plan. Typically, the repayment plans last for approximately 36 months. However, if additional time is requested they can last up to 60 months. If you make every payment, then at the end of your plan, any debt that is unpaid will be discharged from your repayment plan. This can present a major relief to people stuck in mounting and overwhelming debt.
If you miss any of your payments throughout a Chapter 13 plan, then the Court will immediately dismiss your case. This can be a severe disadvantage that creates many more complications in your case. As far as your credit score goes, the bankruptcy will appear on reports for up to 7 years after your case. This is much better than a Chapter 7 bankruptcy, which has a far more negative impact on one's credit score.
There still are conditions that must be met in order for someone to be able to file a Chapter 13 bankruptcy. One of the most important factors is that a person must have a regular income. For students in particular, they may face difficulties in trying to file a Chapter 13 bankruptcy without having a regular income. Additional requirements include having liquidated and unsecured debts that do not exceed $336,900 and secured debts that do not exceed $1,010,650.
There are some other major differences between Chapter 7 bankruptcies and Chapter 13 bankruptcies. A Chapter 7 bankruptcy can only be filed once every 8 years.
Overall, some other basic tips to keep in mind when dealing with Chapter 13 bankruptcy is to stay organized and consult an attorney if you are not sure whether or not you should file.
This article is not intended to be professional legal advice. If you still have concerns regarding Chapter 13 bankruptcy, be sure to seek the advice of a professional attorney.
