Facts About Chapter 13 Bankruptcy
Chapter 13 bankruptcy is just one of the types that can be chosen, and with this chapter you will pay off some or all of the debts owed using income you will receive in the future instead of liquidating the assets you currently have. Filing a Chapter 13 bankruptcy will normally allow you to keep most if not all of your property and assets. This type of bankruptcy is intended for individuals and small businesses, and there are certain requirements that must be that to use this chapter.
Your unsecured debt must be less than $100,000, and this amount involves credit card debt as well as other types that are not secured and backed with tangible assets. The amount of secured debt that you can have under this chapter is $350,000, and is now will normally include any car loans and home mortgages that you owe.
With a chapter 13 bankruptcy either you or your attorney will create a repayment plan, and this is presented to the court and reviewed by your creditors, the trustee, and the bankruptcy court. This repayment plan must pay off creditors in an amount which is equal to or greater than what the creditors would have received if the filing was for chapter 7 instead.
The repayment plan is also scrutinized to determine your income, to ensure that the payments are adequate while providing a budget for you to live on. Usually a chapter 13 bankruptcy plan will range from 3 to 5 years, and during this time you will have your finances placed under court supervision and cannot sell any assets or incur any additional debts without court approval.
If you file for Chapter 13 bankruptcy and the plan submitted does not include full payment to any creditors that have unsecured debt the court will set up a budget, and any income that you have which is considered excess in comp will be used to pay off these creditors until the time frame for the repayment plan has finished.
Trying to negotiate a repayment plan without using a qualified attorney can be a big mistake, and can result in you living on a very small budget for years. When you hire a bankruptcy attorney to file Chapter 13 bankruptcy this bankruptcy attorney will work for you, and help negotiate a repayment plan that is both fair and does not cause a severe financial hardship.