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If You Need To File Chapter 13 Bankruptcy

By: Jamie Wright

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Bankruptcy takes place if person or an organization lawfully reveals their inability to resolve the repayments to the creditors. There are certain laws and regulations concerning bankruptcy, and they are aimed at supplying a limited form of security to both the creditors and debtors. Bankruptcy chapter 13 is a chapter which is contained in the United States Bankruptcy code that can be selected by those wishing to file for for bankruptcy.

The Bankruptcy Code of the United States is held under Title 11 of the United States code. In this Bankruptcy code, there are detailed chapters which establish several forms and situations of bankruptcy. Bankruptcy chapter 13 is also one alternative available to a bankrupt individual. Debtors may prefer to file the bankruptcy under Chapter 7 which would result in liquidation or straight bankruptcy, chapter 12 (reorganization which is similar to Chapter 13 but offers additional benefits for farmers and fishermen), Chapter 11 and Chapter 13 which is the reorganization of the business. Furthermore, in many instances the debtor can even change to another detailed chapter from chapter 7 or 11 when faced with involuntary bankruptcy.

Bankruptcy chapter 13 allows an person to undergo financial restructuring under the supervision of the federal bankruptcy court. Nonetheless, not every person can file bankruptcy chapter 13 since there are limited requirements that have to be fulfilled. In order for a debtor to successfully file bankruptcy chapter 13, he or she must have a disposable income to originate a payment plan to settle the creditors. Furthermore, the Bankruptcy Code has assigned debt limits for an individual to be entitled to file Chapter 13, amounting to no more than $336,900.00 in unsecured debts and $1,010,650.00 in secured debts.

Under bankruptcy chapter 13, an individual proposes a 3 to 5 year plan to settle the creditors and the repayments should begin within thirty to forty five days after the initial bankruptcy case has been filed. In addition, during this time period, the creditors are permitted to accumulate their previous debts only through the bankruptcy code. Usually, the creditor will be permitted to retain his property and the creditors will be settled an amount less than the actual owed debt.

However, there are certain disadvantages of bankruptcy chapter 13 for instance; the filing for bankruptcy will stay on in the individuals credit report for up to ten years and he/she cannot acquire any more credit without the approval of the bankruptcy code. In addition, creditors may not be motivated to provide credit to an individual in this situation.
Thus, bankruptcy chapter 13 provides protection to debtors while supplying creditors a way to reclaim their money. Overall, it can be seen as a pretty good alternative particularly for debtor.

Article Source: http://depositarticles.com/

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