Two Major Problems With Chapter 13 Is That The Person Filing Must Have A Steady Income And Some Disposable Cash

Category: Finance.

Most consumers have heard of Chapter 7 bankruptcy but there is another type known as Chapter 1This article details some of the differences between the two and how they may affect someone who has to file. In many cases, you are allowed to keep your home and your car under either plan as long as your equity does not exceed certain limits.

There are many differences between Chapter 7 and Chapter 13, but the main difference between Chapter 13 and Chapter 7 is Chapter 13 often allows a debtor( the person filing for bankruptcy) to keep certain assets that would otherwise be lost under the Chapter 7 rules. Under Chapter 7, you would not, however be able to keep rental properties, and things of, antique collections that nature, which you can retain under Chapter 1 In general, a Chapter 13 bankruptcy is usually filed for people who have too much income to file under Chapter This also includes persons who have a large amount of non- dischargeable property. Chapter 13 normally protects individuals from the collection efforts of creditors and permits those who are filing to retain their real estate and personal property. Chapter 13 bankruptcy is for individuals, or small business owners, who want to repay their creditors but are in financial hardship. It also provides means so that the person can pay his or her debts through reduced payments. The trustee will also calculate how much the debtor can afford to pay each month which is that amount above necessary living expenses.

A trustee works for both parties and will usually come up with a three to five year payment plan which offers to pay off all or part of the debts owed. Debtors must have a regular income and have at least some disposable income in order to make this work. Two major problems with Chapter 13 is that the person filing must have a steady income and some disposable cash. It is the disposable income that is used to pay back the debts. For many people, they simply do not have that. The second issue is that the person filing Chapter 13 will have to pay back more of the debt owed than those seeking protection under Chapter Chapter 13 will go on your credit report but it usually stays on for less time than a Chapter Filing for bankruptcy is a serious move and should not be done without first exploring every other option. If they had it, they might not be in bankruptcy in the first place.

In the old days people often believed that filing for bankruptcy was not that big a deal. The bankruptcy laws have changed recently and anyone considering filing should first seek out the advice of a competent and qualified bankruptcy attorney. Much of that has changed now, and it can be a very big deal in terms of you getting future credit or loans. These specialized attorneys will be able to best guide you toward the correct option that will best suit your needs.

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