Understanding the Basics of Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is usually used for Individuals that want to retain their property and have regular income. Unlike a Chapter 7 Bankruptcy, those who file for Chapter 13 do not have to worry about liquidation of their assets. Most of the time, the debtor is allowed to keep everything they own, regardless of whether the property qualifies for an exemption or not. The only requirement is that the Chapter 13 Bankruptcy plan is in compliance with the law. For those who file Chapter 13 Bankruptcy, you can expect to pay more in attorney fees because the process is a lot more complicated than a traditional Chapter 7 Bankruptcy case.
Chapter 13 Bankruptcy Necessary Time Constraints
In terms of Chapter 7 Bankruptcy, it only takes a few months to complete the entire process. Chapter 13 Bankruptcies, on the other hand, will range from three years up to five years. The reasoning behind the length of time for a Chapter 13 bankruptcy is that you are responsible for making regular payments to the trustee for a specified length of time. Depending upon where your income falls in line, the period of time is going to vary between 3 to 5 years.
Terms of the Chapter 13 Bankruptcy Payment Agreement
Chapter 13 bankruptcies are aimed at reorganizing your debt by making payments to your creditors over an extended period of time. A means test is conducted to analyze the income of the debtor, which will help determine how much disposable income the debtor has. It is this disposable income that is used to help calculate the monthly payments for the plan. Based upon the calculation of the means test, there may not be any allocations to your unsecured creditors, such as those of medical bills and credit cards. The plan will always pay any priority claims, such as those of child support, tax debt and domestic support.
Restrictions Imposed Upon Individuals in a Chapter 13 Bankruptcy
When it comes to Chapter 13 bankruptcy, there are a few different restrictions that are imposed upon those who file that are not in a Chapter 7 Bankruptcy. As a debtor, you are responsible for making your monthly payments to the trustee. You are not allowed to incur significant debt without gaining approval of the court first. If you are using your car for collateral on a loan, you will need to make sure there is car insurance in place accordingly.
Discharge from the Bankruptcy Proceeding
Just like that of a traditional Chapter 7 Bankruptcy, you will get a discharge of your debts at the end of your payment plan. It is important to remember that there are some debts that cannot be discharged. Along with the discharge from a Chapter 13 bankruptcy, you need to remember that the discharge is personal. Anyone who is obligated to pay on the debts that were discharged from your name will still be responsible for payment of the debt. The relief only applies to the one who filed for the Bankruptcy in the first place.