People who are having some heavy debt obligations are inclined to file for the bankruptcy in order to free themselves from the clutches of creditors. Generally there are two types of bankruptcies that a customer can file i.e. Chapter 7 bankruptcy or Chapter 13 bankruptcy. Let us discuss the chapter 13 bankruptcy options.
Unlike Chapter 7 Bankruptcy which allows you to only eliminate the debts, Chapter 13 Bankruptcy gives us the option to clear all or some of the debts at a lower interest or zero interest within a fixed time-period. This is sometimes considered as comforting to that of Chapter 7. In chapter 7 of Bankruptcy code, whole of the assets were liquefied but in chapter 13 restructuring of debts are considered. The restructuring of debts gives the debtor to utilize any income that he /she may get in future, thereby paying off the creditors.
For an individual to be able to file for Chapter 13 Bankruptcy he/she should have a regular source of income and can sustain the reductions or adjustments that is about to incur. Along with regular source of income there are also certain other criterions that must be met before going for Chapter 13 Bankruptcy. Consult with your attorney as he can very well explain you more of it.
In Chapter 13 Bankruptcy, an interest free repayment plan is prepared for a brief period of time; this can be as long as five years. The plan must be clearly mentioning the transaction details which will be occurring along the time-line. The payment should start within thirty days to a maximum of forty-five days from the date of filing for bankruptcy.
There are certain limits concerning the amount of debts that can be processed in a Chapter 13 Bankruptcy. Currently, the total amount of unsecured debts, such as credit card debts and personal loans, may not exceed $336,900, and the total amount of secured debts, such as mortgages and auto loans, may not exceed $1,010,650. These amounts are periodically increased.
Bankruptcy is a very complicated process that requires a profound knowledge of bankruptcy laws and significant amount of experience in the bankruptcy field. Many people have a habit of trying a do-it-yourself so as to find out why they do not qualify for Chapter 7, facing high debt repayments under Chapter 13 provisions. To avoid such common mistakes it is highly advisable and recommended to get an experienced bankruptcy attorney on your side. Most bankruptcy lawyers offer free consultations and can answer your most disturbing questions, along with drawing out a cost-effective strategy for your bankruptcy filing.