Thursday, December 16, 2010

Chapter 13 Bankruptcy

Borrowers with overwhelming financial obligations can obtain debt help through a chapter 13 bankruptcy given the borrower has income and is able to make good on their financial obligations through a feasible and fair compromise with the existing creditors.

What is Chapter 13 Bankruptcy?

This bankruptcy chapter is the legal process of restructuring the debt under the supervision of a trustee.

This is not a liquidation like chapter 7 bankruptcy. Instead this chapter of bankruptcy restructures the existing debt of the borrower by developing a feasible and fair payment plan. Creditors are paid according to the plan developed in the chapter 13 bankruptcy process.

Key Points of Chapter 13 Bankruptcy

The repayment plan will be for a term of about 3-5 years.

Chapter 13 will stop foreclosure.

The mortgage payments will be due as usual after you file and the back owed portion will be part of the chapter 13 repayment plan.

Designed for individuals or unincorporated businesses.

Other Important aspects of Chapter 13 Bankruptcy

Bankruptcy is not a pleasant or relieving experience. Nor is it cheap. There are many consequences which carry a long shelf life and the consideration of Bankruptcy should be done so with extreme care, time, responsibility, and the proper resources and guidance such as a qualified attorney.