Reference - Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a reorganization bankruptcy. It means that
the people who decide to file for this type of bankruptcy want to clear
their debts over a period of three to five year.
Chapter 13 Bankruptcy appeals to those who have non-exempt property
that they want to keep hold of and those who want to stop a foreclosure
or repossession of property.
If the individual has sufficient income that is regular and can pay
for their day to day living expenses and have something left over to
repay their debt then they can file Chapter 13 Bankruptcy. If their
finances do not fall into this category then they can not.
The person filing for bankruptcy should provide the court with
schedules of assets and liabilities and then within certain time limits
they have to file a repayment plan.
Once the repayment plan has been file in Chapter 13 Bankruptcy
proceeding the creditors have a limited amount of time to object to the
plan. If no objections are made then the debtors and their creditors are
bound by the plan.
Chapter 13 Bankruptcy will allow the debtors to keep a property that
he has failed to keep up mortgage payments on even if it is secured. An
"automatic stay" is ordered by the court to prevent any foreclosure
proceedings to continue and the debtor then has the opportunity to get
caught up during the reorgnization period. However, if this does not
happen then the debtor will be subject to the foreclosure at the end of
the period.
If there is any secured property that has a value less than the debt
in question, Chapter 13 bankruptcy allows for the return of the property
to creditor. The creditor can then sell the property and pocket the
proceeds.
Secured debts are to be repaid first and then when they are dealt
with then non-secured debts will be repaid. In Chapter 13 Bankruptcy any
unpaid portion of non-secured debts will be discharged after the period
of reorganization has passed.
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