Chapter 13 Bankruptcy -the Basics

We present you in this article: Chapter 7 Bankruptcy – the basics some of the basic principles of this Bankruptcy type. Here are the basics of Chapter 13 Bankruptcy – the other main type.

Chapter 13 bankruptcy is also know as reorganization bankruptcy and is very different than Chapter 7.In Chapter 7 most of your debts are erased but the bankruptcy court control all you assets. In Chapter 13 Bankruptcy you keep control on your properties but you must use your income to pay the debts in 3 to 5 years.

Who can apply for Chapter 13
As explained above in Chapter 13 bankruptcy you must use your income to repay your debts. So you must prove to the bankruptcy court that you can do that .You must prove that your income is regular and that you make enough money. Otherwise the court can rule against you.
You are also ineligible if your debts are too high. The secure debts cannot exceed 1,010,650 usd and the unsecured debts 336,900.

What is the Chapter 13 Bankruptcy process
If you want to go for Chapter 13 you must receive credit counseling from an agency approved by the United States Trustee’s office. These agencies may charge a fee for the counseling but if you cannot pay them they must provide the services at lower rates or for free.
After you received the credit counseling you can file for Chapter 13 bankruptcy.

The Chapter 13 Repayment Plan
The most important thing in this type of bankruptcy is the repayment plan. If approved, this plan will play a major part in your life for the next years. The repayment plan must describe in detail how you will pay each one of your debts.