Posts Tagged ‘filing Chapter 13 bankruptcy’
Taking Bankruptcy Classes Are Now A Mandatory Requirement
March 31st, 2009
Due to concerns of people abusing the protections provided for through the US Federal bankruptcy code, the US Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which introduced a number of changes. One of these changes is the new requirement stating that all those filing for bankruptcy must take mandatory bankruptcy classes.
The debtor is the person who is going through the chapter bankruptcy filing. The new law mandates that the debtor must take two different types of classes during the course of the bankruptcy proceeding. The first class is for pre-filing counseling. The second required class is for pre-discharge education purposes.
During the first of the set of mandated classes, the debtor must attend a class that provides information and counseling from approved professionals before filing for bankruptcy. The purpose of the pre-filing counseling class is to help the debtor gain a full understanding of the process of a new bankrupt filing, to understand the consequences that bankruptcy leads to with regard to their credit score and long-term ramifications, and to investigate available alternatives to the drastic decision to file.
One of the aspects of the pre-filing bankruptcy classes is to have the consumer, or debtor, provide thorough information about their income, their household expenses and their various debts and monthly obligations. With this information, the pre-filing counselor can help the person, or couple, to carefully do a budget analysis. At this stage, some of the alternatives to filing for bankruptcy can be more fully explored to see if there might be something else they can do to improve their financial condition.
As part of the counseling, instruction will be given on the differences between filing Chapter 7 bankruptcy and filing Chapter 13 bankruptcy. As well, an overview of both the advantages of filing for bankruptcy and the disadvantages will be discussed. After the debtor goes through the classes for pre-filing counseling, they will be issued a certificate of completion. They must have this certificate of completion in order to proceed to the next step of filing for bankruptcy.
The second of the required classes that a debtor must take is the pre-discharge education class. The debtor is to take this class between the time that they complete the bankruptcy claim form and file it with the court and when the bankruptcy is discharged. A bankruptcy is not considered complete, and the debts are not eliminated, until the bankruptcy is discharged by the court. The discharge of the bankruptcy is the final step in the process.
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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.