Chapter 13 bankruptcy takes care of debtors who are unable to repay their debts so that they are able to pay part of the debt from their income. The debt can be repaid for a period spanning from three up to five years although this is something that is done upon the determination of the court in relation to the debtor’s current financial situation and eligibility.
There are some benefits that are associated with this program and one of them is that people have the opportunity to rescue their homes from the nerve wrecking foreclosure. The chapter has the power to restrain a foreclosure process.This involve the resolution of past mortgage payments that are due. It also allows individuals to repay their secured debts that might have been incurred within the period of bankruptcy.
The program helps a great deal in bringing down monthly payments at a very high rate. This also ensures that the cosigner of the debt is in no way affected by the process. The provision works as a consolidated loan so that the debtor can repay the debt to the trustee without going directly to the creditor. This is followed by the distribution of payments to these creditors once they payment has been made.
The process is quite simple in the sense that the debtor does not have any contacts with the creditors. This helps in reducing quite a number of financial struggles. A debtor can go through this process without necessarily have any legal representation but this is only if he or she is a legal expert. This is something that is not advisable because there are some processes that are quite complex and would require the debtor to seek counsel from a qualified financial lawyer. The reason for this is because one might end up making some blunders that can have both financial and legal ramifications.
The debtor is not required to give up assets while under this provision but there are some situations that would require one to liquidate some assets for the payment of part of the debt. It is however important to note that in most cases the debt is paid off over time through the monthly plan. The provision also allows for some exceptions to the filing in some cases.
It is important to know that there are specific debts with which one can benefit from in this program. These include government fines, tax debts, student loans and child support. There are others that are not covered due to their intensity therefore, one should have this information. Filling for this kind of bankruptcy however ensures that the debtor is not harassed by creditors.
The creditor should be notified on time concerning the issuance of the bankruptcy to ensure that they do not cause any discomfort to the debtor and this is done through what is called the automatic stay. This is meant to ensure that the debtor stays safe from any seizure of assets or any other harassment. This can take any form such as phone calls, lawsuits and also wage garnishing.
Chapter 13 bankruptcy cushions debtors from losing their retirement benefits although it is important to check whether the state of residence allows for this. This is why it is important to have a lawyer who will be able to make everything clear.
If you think you need to file for bankruptcy, be sure you check Sam’s comprehensive website on Filing For Chapter 13 Bankruptcy, and if you should you file for bankruptcy.