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What Is A Chapter 13 Bankruptcy?
Many consumers that are bogged down in debt frequently turn to bankruptcy as a form of restoring their financial status back to a zero balance. Unfortunately many of these same consumers are confused when it comes to the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy. This quick article will explain what a Chapter 13 bankruptcy actually is and what it does for a consumer that files this form of debt relief.
Before explaining what a Chapter 13 is I want to make sure that you are familiar with what the definition of bankruptcy actually means. It is basically a legal process that is filed in a court of law. The reason for filing this debt elimination strategy is to relieve individuals or businesses that cannot pay their current financial obligations of those same debts. This allows them a fresh start on their finances.
A Chapter 13 bankruptcy which normally runs around $185 to file is commonly referred to as reorganization bankruptcy. This form of debt elimination is filed by consumers that wish to ay their debt off between a period of 3 - 5 years. This is a preferred strategy for individuals that wish to actually keep some of their possessions and have the means to financially meet their normal living expenses while still having money left over to pay towards their accumulated debt.
When filing a Chapter 13 the individual will present a bankruptcy petition which list the consumer's schedule of assets and liabilities. Immediately following this the person filing bankruptcy will have to present a repayment plan that is carefully reviewed by the debtor's creditors to see if it meets their needs. If there are no objections or points of argument then both the creditors and consumer filing bankruptcy must follow the reorganization plan.
Additional confirmation tests remain before a reorganization bankruptcy takes place. One of these tests compares the amount that the unsecured creditors will receive under the plan to the amount they would receive under a Chapter 7 bankruptcy. Basically what this means is that all unsecured creditors must be able to receive the same amount of monetary compensation under a Chapter 13 as they would for a Chapter 7. A final test requires that the individual filing bankruptcy must also pay all of their disposable income into the repayment plan.
A Chapter 13 is especially beneficial for consumers interested in keeping on to some very important possessions such as their home. For instance if the consumer has missed several house payments and is facing the scary possibility of a foreclosure they can effectively halt the foreclosure by filing for Chapter 13 bankruptcy. This is normally referred to as an automatic stay. This allows time for the consumer to catch up on missed payments. If the individual is unable to effectively catch up during this reorganization period then the foreclosure proceedings will continue as before.
When it comes to a Chapter 13 or any other form of bankruptcy it is highly recommended that an attorney who is knowledgeable in bankruptcy law be consulted in order to receive the most accurate information. One additional note - although a bankruptcy can restore an individual's financial status it does so with the high price of that same consumer's credit suffering a blemished record for about 10 years making it difficult to obtain future credit when needed.
Timothy Gorman is a successful webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, consolidation and bankruptcy information that you can research in your pajamas on his website.
MORE RESOURCES:
 Card Trak | Obama Credit Card Debt Relief Program – New Act to Help Lower Debt Load Subprime Blogger (blog) The Obama credit card debt relief program was designed to help all Americans alleviate their credit card issues. The new Credit CARD Act that was signed ... Credit Card Debt Relief: 3 Simple Steps Credit Card Debt Relief Self-Help Tips Offered by Total Debt Relief ConsumerDebt and New Federal Credit Card Act (CARD) to be Topic of March 9 ... |
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 Reuters | HAITI: US Acts Quickly on Debt Relief Ahead of Preval Visit Inter Press Service "I have long been a proponent of debt relief for low-income countries to enable them to focus on providing health care, education, and other vital services ... Senate supports Haiti debt relief |
 MiamiHerald.com | Highlights of Senate bill extending tax breaks, jobless aid Gaea Times (blog) It meets and exceeds all government regulations on sexiness. amortgagedebt Government Credit Card Debt Relief Program CARD Act Offers New Rules and ... State capitol report: House Dems push on for reform |
Debt Relief (Developing Countries) Bill Committee DeHavilland (press release) (subscription) The Debt Relief (Developing Countries) Bill Committee has met to consider the provision of the legislation. The Chair: Good morning everybody. ... |
 Los Angeles Times | Justices to Hear Funeral Protest, Vaccine Cases Courthouse News Service (CN) - Bankruptcy attorneys must identify themselves as "debt relief agencies" and can't advise consumers to rack up more debt before filing for bankruptcy, ... Supreme Court Rules on Bankruptcy Advice, Takes Funeral Protest Case Legal Briefing: Are Hateful Funeral Protests Protected Speech? |
Gov: Debt relief needs regulation The Detroit News Credit unions, banks and regulated debt management companies can help consumers with debt relief, she said, while unregulated settlement programs can be ... Warning For Debt Relief |
Obama Refinance Plan – Need Mortgage and Home Debt Relief Today? Subprime Blogger (blog) Many American homeowners are in need of mortgage and home debt relief. The Obama refinance plan was created to help all Americans gain access to lower ... |
 CNBC | High Court Finds Lawyers and Their Advice Covered by Bankruptcy Reform Law The American Lawyer Consumer bankruptcy lawyers are "debt relief agencies" under a 2005 federal bankruptcy law and restrictions on the type of advice they can give clients are ... Justices reject First Amendment challenges to bankruptcy law MILAVETZ, GALLOP & MILAVETZ, P. A. v. U.S. Silenced! High Court Upholds Ban on Type of Legal Advice |
Obama Credit Card Debt Relief Plan – Get Out of Debt in March 2010 Subprime Blogger (blog) The Obama credit card debt relief plan was designed to help Americans get out of debt as soon as possible. If you are looking to take the necessary steps to ... Why Debt Relief Can Help You and the Importance of Identifying a Professional ... Best Credit Card Debt Relief Programs: How to Get Started Obama Credit Card Debt Relief Plan – Credit CARD Act Now Law in March |
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