If you are considering filing for bankruptcy, there is some Chapter 13 bankruptcy information that you should know so you can make an informed decision before you file. Chapter 13 is also known as debt repayment bankruptcy. Chapter 7 bankruptcy eliminates debt and Chapter 13 allows the debtor to make payments to a court approved trustee over a period of time not extending five years. It is during this time period the debtor pays off as much debt as he or she can.
Once the repayment plan obligations have been satisfied, the remaining unsecured debts will be discharged by the court.
Are You Eligible To File For Chapter 13?
The most important Chapter 13 bankruptcy information fact is whether or not you are eligible to file Chapter 13. No debtor can file for any type of bankruptcy until they have completed credit counseling from a court approved agency. A reputable bankruptcy attorney in your area can help you choose the best credit counseling program for your particular financial situation.
In order to file for Chapter 13, a debtor must also have a steady income source. Courts require this because debtors must make regular repayments to the trustee. After the debtor pays the monthly expenses, the courts require that enough money is left over to fulfill debt repayment obligations.
Why Choose Chapter 13 Bankruptcy?
The primary reason why someone would choose to file Chapter 13 is because they are not eligible to file for debt liquidation, Chapter 7. If the difference between income and expenses is large enough to allow the debtor to make monthly payments, the only option for debtors is Chapter 13.
Even if a debtor is eligible for Chapter 7, he or she may still choose to file Chapter 13 instead. There are several benefits to filing Chapter 13 including:
- The ability to repay important debts
- Co-signer protection
- Protection from repossession or foreclosure
Schedule a consultation with an experienced bankruptcy attorney in your area to receive more Chapter 13 bankruptcy information. After the consultation, you can decide if Chapter 13 is the best option for you.
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