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Chapter 13 Bankruptcy

The two primary types of bankruptcy available to individual debtors are Chapter 7 and Chapter 13. A Chapter 13 is a type of reorganization, and is sometimes called a “Wage Earners Plan”. It allows debtors to protect some assets and to catch up on missed payments through a reorganization plan. It also allows debtors to come up with a plan to pay back creditors over a period of time. The plan is submitted to a bankruptcy judge. If it’s approved, a court-appointed trustee will administer the plan. The trustee collects the funds from the debtor and distributes the funds to creditors.

A Chapter 13 starts when a debtor files a petition with the bankruptcy court. A Trustee is then appointed to administer the case. Once the petition is filed, most collection actions are stopped, including foreclosures, which can be very helpful for debtors. As soon as a Chapter 13 is filed, foreclosures stop, and the debtor can bring past-due payments current over a period of time. However, if the mortgage company completes the foreclosure under state law before a Chapter 13 is filed, or if the debtor fails to make regular payments under a Chapter 13, the foreclosure may still occur.

Between 21 and 50 days after a debtor files a Chapter 13, the Trustee holds a meeting of creditors. During the meeting, the Trustee and creditors can ask questions of the debtor, and the Trustee will determine whether the bankruptcy is being filed fraudulently.

Under a Chapter 13 bankruptcy, debtors propose a repayment plan to make installment payments to their creditors. This payment plan lasts between three and five years. In order for the plan to work, the debtor must make regular payments to the Trustee. The Trustee will then make payments to the creditors. The creditors may receive less than full payment on their claims, depending on the plan. If the debtor can’t make the payments under the plan, the court may dismiss the case, or convert it to a Chapter 7 bankruptcy, which is a discharge.

A Chapter 13 can only be filed by individuals with sufficient income to pay the creditors. There are also limits on the amount of debt an individual filing a Chapter 13 can have. Upon completion of all the payments under the plan, the debtor will receive a Chapter 13 discharge. The discharge will release the debtor from all debts provided for by the plan. There are several types of debts which aren’t included, such as alimony and child support, taxes, mortgages, and student loans.

Are you considering a Chapter 13 bankruptcy? If so, contact the skilled bankruptcy attorneys at National Consumer Law Group. They will help determine which options are right for you.

The National Consumer Law Group, A Professional Corporation is a law firm with a nationwide network of attorneys providing a broad array of legal services to individuals and businesses nationwide in the areas of Tax Relief and Bankruptcy matters.

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