Posts Tagged ‘Chapter 13 bankruptcy law’
An Overview Of A Chapter 13 Bankruptcy
March 7th, 2009
A Chapter 13 bankruptcy is a certain kind of court filing that is provided for under US Federals laws that allows a debtor to set up a repayment plan for the debts owing. Once the Chapter 13 bankruptcy forms have been filled out, the new plan for repayment can be for three years or for five years. The plan itself is crafted to accommodate the creditors according to the bankruptcy code and must be agreed to by all parties. The execution of the plan is under the authority of the bankruptcy trustee who is a third party appointed by the court.
When someone files a Chapter 13, it means that they are not able to repay their debt obligations as they originally agreed to do when the debt was taken on. Chapter 13 bankruptcy law allows for these debts to be reorganized for the purpose of repayment. This is different than a Chapter 7 bankruptcy, in which the debts are discharged immediately instead of being set up with a repayment schedule.
In most cases, a Chapter 13 type of bankruptcy has a repayment plan in which the debtor makes monthly, bimonthly or weekly payments to the trustee. The trustee then provides bankruptcy help by taking care of properly dispersing the payments to the creditors. In most instances, the amount of the debt has been restructured and is less than the full amount that is owed to all the creditors.
The trustee in a Chapter 13 bankruptcy is responsible for learning about the financial situation of the person who is filing for bankruptcy, to determine how much they are able to make in payments to the bankruptcy court on a regular basis. The trustee also takes into account the income level of the person, or family, and the obligations which are exempt from the bankruptcy proceedings.
Because a Chapter 13 requires that regularly scheduled payments be made to the court, it is generally recommended only for debtors who have a regular and stable income. For those who are seasonal workers or freelancers, filing Chapter 13 bankruptcy is not the best solution for their financial troubles, in most instances.
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