Chapter 13 bankruptcy is also referred to as bankruptcy for the average working individual. This section of bankruptcy allows individuals who are filing Chapter 13 bankruptcy the opportunity to go through debt reorganization. This reorganization is handled by the bankruptcy court. According to the code, the primary objective for a Chapter 13 bankruptcy filing is to have debtors with a regular source of income repay their debts in accordance with a court approved repayment plan.
Debtors have the option of filing Chapter 13 bankruptcy or Chapter 7 bankruptcy. They cannot file both so it is important for debtors to understand which filing would be more beneficial to their situation. A Chapter 7 filing allows a court appointed trustee to liquidate assets to repay creditors, but a Chapter 13 filing allows debtors to repay creditors within a certain time frame. Most bankruptcy courts allow individuals up to five years to pay off their debts.
How Are Creditors Paid?
Under Chapter 13, the creditor cannot contact the debtor regarding the debt. Any money the creditor receives is given to them by the court. The debtor is able to maintain possession of his or her assets and the creditors are typically repaid less than what they were originally owed.
What Are The Advantages of Filing Chapter 13 Bankruptcy Instead Of Chapter 7?
One of the advantages of filing Chapter 13 is that foreclosures are halted once the filing process begins. There are also dischargeable debts that are associated with Chapter 13 bankruptcy. Some of these debts are:
- Medical bills
- Credit card bills
- Personal loans
There are also several types of debt that cannot be discharged. These debts include:
- Tax bills
- Child support
- Student loans
An experienced bankruptcy attorney in your local area will let you know whether the debts you have incurred can be discharged or not.
It is important that you are aware of the bankruptcy laws when you are filing Chapter 13 bankruptcy. Schedule a consultation with an experienced bankruptcy attorney. The attorney will advise you on whether you should file, and which section of the bankruptcy code is relevant to your financial situation. A good bankruptcy attorney will also advise you on the best way to financially recover after you have filed for bankruptcy.
Should you file Chapter 13 or Chapter 7? If you live in the greater Atlanta area, Douglas Jacobson Law Firm’s team of professional attorneys will provide you with the legal advice you need to make an informed decision. Request more information today.