Understanding Major Facts About Chapter 13 Bankruptcy
Chapter 13 bankruptcy is basically a repayment plan that allows people to repay part of their debts using their regular income. The period for repayment ranges between three and five years old but this can be determined by the court depending on the applicant’s eligibility and current situation.
There are many advantages that come along with this provision. One of them that sticks out so prominently is the fact that a home facing foreclosure can be saved. The chapter contains provisions for the restraining of a fore closure as well as the handling any past mortgage repayment tussles. Debtors are also given an opportunity for the repayment of their debts that are could have been accrued during the period in which the bankruptcy was declared.
This provision is quite instrumental when it comes to the reduction of monthly payment of the debt. The cosigner of the debt is also cushioned from any eventuality that might arise as a result of failure to repay the loan. The chapter acts as a consolidation loan that allows the debtor to make payments to trustees who are overseeing the repayment program. The money is then distributed to all the creditors in the proportion of the money they had lent out.
The process works in such a way that the debtor has no contact with the creditors and this helps in reducing financial burdens in future. It is possible for one to file for this offer without legal representation but this is only if the debtor is a legal expert in his or her own right. This is however not advised since there are some areas that are extremely complex and that would require a legal expert in this field. It is quite easy to make some misrepresentations as an individual and end up having grave legal and financial repercussions that could end up costing a lot of money.
The debtor is given the freedom to remain with the assets without being taken by the creditors except in situations where huge debts are involved. The debt of this nature is basically paid on a monthly basis to ease the burden on the side of the debtor. There are situations though where some exemptions are provided.
The provision however does not take care of all kinds of debts but cater for such as tax debts, government fines, child support and student loans. Major debts are usually not covered under this chapter. One of the benefits of this plan is that it prevents the debtor from being harassed by creditors.
It is important to notify creditors of the situations as this is what causes the automatic stay to have its effect. This means that creditors have no right to seize any of the debtor’s assets or cause any kind of discomfort. This could be in form of disgusting phone calls, lawsuits, wage garnishing and many others.
The debtor is cushioned by chapter 13 bankruptcy in the sense that the retirement savings are not interfered with although it is good to check what the law says in the state of residence. This can be achieved with the help of a qualified lawyer who is able to provide advice on the process.
If you think you need to file for bankruptcy, be sure to check Sam’s informative website on Filing For Chapter 13 Bankruptcy, and if you should you file for bankruptcy.