Broadly speaking, chapter 13 bankruptcy deals with codes for bankruptcy which allows the rectification of debt of a person with basic profit or income. This chapter has a provision that allows people in debt to repay debt in a period of four to five years. Another name for this chapter is the wage earner’s plan, it allows people who earn what a middle class would earn, to formulate a scheme that will allow them to return the amount of money they have taken as debt.
This chapter allows the people in debt to put forward a road map for repayment of their debt to their creditors. Generally, this plan requires around four to five years to get executed as the repayment amount is not paid in a lump sum amount but rather in the form of installments. Under no circumstances, the repayment period shall not exceed the duration of five years, the plan has a maximum limit of five years for repayment.
Chapter 13 And Its Advantages
This chapter allows people to learn about the critical concepts of financing that possess numerous benefits. This chapter offers people a chance to protect their homes in the event that they are unable to repay their debt and they have mortgaged their property. If the person has filed for protection under this chapter, then the individual is offered extra time to repay their debt over a set period of time and also allowed to keep possession of their home.
The next benefit that comes with this chapter is that it grants securities to third parties who are in debt along with the person who filed under chapter 13. Chapter 13 has a provision that grants protection to an individual or a group of individuals who co-sign under this chapter.
This chapter also offers people numerous benefits over liquidation which is mentioned in chapter 7 Bankruptcy. And lastly, this chapter grants provisions for consolidating all the consumer debt into one single monthly repayment. The payment directly goes to a single trustee who comes under chapter 13. This trustee then distributes this collected amount to various creditors of the person in debt.
Eligibility Criteria For Chapter 13
Any person who owns a business, or provides his or her services to a business, can file for protection under chapter 13. The criteria are that the total amount of debt should be less than $2,750,000 when the person is filing for chapter 13 for bankruptcy. A person cannot file for relief under this chapter, the condition is that if the person has previously had a rejected case for bankruptcy within the previous 180 days as a result of the borrower’s deliberate inability to attend court or to follow the judge’s orders, or as a result of the borrower’s voluntary dismissal after lenders decided to seek the court’s assistance to recoup house for which they have liens.
Workings Of Chapter 13
The case is initiated under this chapter when a debtor files for bankruptcy, in the court which has jurisdiction under which the debtor’s home comes. The debtor is also instructed to get a credit certificate and a plan for debt payment devised during the counseling for repayment of debt. The debtor must also show his or her income receipt for two months in case the debtor has received any income from his or her employment.
In addition to this, the debtor must also present before the court his or her income statement and inform the court regarding his or her increment in his income. The debtor must provide statements concerning tax rebates if the person has got any. In case the debtor has taken loans for his or her tuition fees then the debtor must disclose the statement before the court. A copy of the documents must be sent to the trustee of the case. And as a best practice, a copy must remain with your bankruptcy attorney.
There will be some fees levied by the court for filing the case for administration expenses. The fees are paid to the court’s appointed clerk. There is also a provision that allows the person who is filing for bankruptcy to pay the fees in installments. In the case of a married couple filing under chapter 13, there is also a provision that allows the couple to file a joint petition.
In such filings, the income statements, tax rebates, properties of both persons are required. The property can be owned by one of the couples or both. This is done so that the court and the assigned trustee can assess the financial condition of the household.
Chapter 13 bankruptcy allows individuals and couples to get relief from their consumer debts, and gives them a chance to repay their debt during the extended period granted by the court of law.