Chapter 13 Bankruptcy

Chapter 13 bankruptcy is used by individuals or businesses which have a steady income in order to resolve their financial difficulties under court supervision. When this type of petition is filed, a repayment plan is usually established in order to allow for the debt to be repaid over three to five years. When this chapter is used for bankruptcy, the assets of the debtor are fully retained by the debtor, unlike in other forms of court-supervised financial solutions. Due to changes in bankruptcy law in 2005, several people who would previously have been able to use Chapter 7 where debts are wiped out, now have to use Chapter 13 for their cases.

In order to file bankruptcy under chapter 13, the debtor must have less than $304,675 in unsecured debts and less than $922,975 in secured debts. If the bankruptcy case involves a man and his wife, these limitations will not be doubled.

A chapter 13 bankruptcy discharge can’t be granted for anyone who received bankruptcy discharge under Chapters 7, 11 or 12 within the last four years or anyone who has declared bankruptcy under Chapter 13 within the last two years.

A person who decides to file bankruptcy under chapter 13 will be allowed to keep their home if they successfully follow the repayment plan. If they don’t however, the home might need to be kept under martial ownership law or homestead exemption if certain conditions are met. The 2005 law, however, changes the homestead exemption to no more than $125,000 if the home was purchased within the 40 months immediately before the court filing of the bankruptcy or if there was any case of fraud involved.

When you file for chapter 13 bankruptcy, a person will be able to keep their vehicle(s) as long as they repay the money carefully based on the repayment plan. If they don’t, the vehicle will be able to be taken by the creditors.

Like all bankruptcies, chapter 13 bankruptcy is in fact quite complex. It is indeed far better to try to manage your money than to fall into the type of financial troubles that result in this type of court action. Remain aware that the court action will remain on your credit record for ten years.

Article Source: http://www.debtfinancearticles.com.

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