Being so much in debt that repaying your debts becomes well almost impossible is something that many people find them facing and which leaves them with no alternative but to file bankruptcy in order to get their financial situation back on track. However, as good as it may seem that filing bankruptcy will help you out of such financial mess, it can also lead to much confusion in your mind trying to figure out what is Chapter thirteen bankruptcy and how does it differ from chapter seven bankruptcy. First thing to remember when filing bankruptcy is that is now no longer a state matter its now a federal matter. If you have creditors going after you this will all go away when the bankruptcy is file all you have to do is giving them a bankruptcy filling number and by law they have to stop calling you and start talking to the bankruptcy courts.
Understand What Bankruptcy Is
However, before looking at what Chapter 13 bankruptcy is, it would be necessary to first understand the meaning of bankruptcy itself. Bankruptcy is a legal process filed in a law court with the intention of eliminating debts and provides the individual or business that is filing bankruptcy with relief from having to pay off the debts, and thus can make a new start in life. Chapter 13 bankruptcy may cost you about one hundred and eighty-five dollars to file and it is commonly also referred to as reorganization bankruptcy and such a form of bankruptcy is generally filed by persons that wish to eliminate their debts in three to five year's time. Under Chapter 13 bankruptcy, individuals can keep part of their possessions and also have a means to finance some of their day to day expenses while at the same time still have some money left over to pay off their debts. If you want to pay off your chapter 13 bankruptcy early there are a few things that you need to know. First the question will come to you of how did you get money to do this, second make sure that this money where disclosed in the Chapter 13 when first filling the papers. Makes sure its not an income that you forgot to disclose. If its not then go ahead an pay off your Chapter 13 early. So, when you decide on filing Chapter 13 bankruptcy, you will need to present your petition for bankruptcy in which you need to list your schedule of liabilities and also assets. And, following the filing of Chapter 13 bankruptcy, you need to provide a plan for repayment of debts which has already been reviewed by creditor's to see that it does indeed satisfies their requirements.
Filing Chapter 13 bankruptcy is beneficial to you if you want to hold on to some possessions including your home, and in fact, filing for this kind of bankruptcy can, under certain circumstances, prevent foreclosure and such an instance is known as automatic stay which will give you time to catch up on your outstanding debts. It is only after you still cannot meet your debt obligations in the period of reorganization that your home will be foreclosed.
Both chapter 13 bankruptcy and debt consolidation are forms of reorganization debt to come to more manageable terms of repayment for the debtor over a prearranged period. However there are significant differences between these two types of consolidation. Mainly in traditional debt consolidation your debts are grouped into one loan and paid over time at a rate negotiated or set by the consolidating agency. There are some advantages to debt consolidation over bankruptcy, rather than owe many creditors you'll simply owe one and although the interest rate may be lower the monthly payments may be larger.
Traditional debt consolidation can offer using Chapter 13 bankruptcy. The main benefit of chapter 13 bankruptcy is that it has certain legal aspects that provide a layer of protection that you simply can not get from any other debt consolidation program. The power of the federal bankruptcy code stands following your right of bankruptcy protection and that protection remains until your case is sorted out in a federal court. Another benefit of chapter 13 is that your secured debts have the priority, these are the loans on your home, auto and anything that has a substantial guarantee then your unsecured debts are taken care of if there is money left over. Traditional consolidation loan programs can not delay payment on either type of debt, it all has to be considered equally important.
Debt consolidation also has a lesser impact on your credit report and it can be a good alternative for someone with disposable income and too much consumer debt, but the circumstances change a lot per case, so although debt consolidation can help you greatly, if you do not change your financial habits you can end up with more trouble than you started with.
In Chapter 13 Bankruptcy ?Order of Relief", provides that protection that keeps your creditors from harassing you in their attempts to collect payments from you. This order also has the power to stop foreclosure proceedings, recovery of any security assets or any compilation judgments against you from taking place. There are no equivalent benefits in debt consolidation that can provide this level of protection and your creditors can not be forced to stop their attempts to collect from you. Under chapter 13 bankruptcy you get between 3 and 5 years to complete repaying your debts under a new restructured plan of repayment, which typically can lower your payments by reducing the balances and the interest rate due. Under traditional consolidation loans the debt can be carried over for years without reducing the balance significantly. Some debt consolidation programs may require you to post some kind of guarantee and typically they prefer your home if it has a good level of equity. Chapter 13 bankruptcy requires no guarantee and furthermore it protects you home from being at risk of repossession or foreclosure. Unclaimed debts are eliminated When you file chapter 13 bankruptcy all your creditors are required to file a proof of claim with the bankruptcy court, often some creditors will not file this claim for whatever reasons, but it they do not and you finish your repayment period to satisfy your debts then any unclaimed debts are eliminated and you're no longer obligated to repay them once your case is discharged. No other consolidation program can extend this benefit.
Most debts are included in your chapter 13 bankruptcy case normally under a debt consolidation program. You are not able to include all your debts, some programs only work with credit card debt, while a separate agency may specialize in tax debts. In chapter 13 you can include tax arrears, mortgage arrears, child support and alimony payments, secured and unsecured debts all under the same plan providing you with the same level of protection from all creditors.
Both Jon Pow & James1 are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jon Pow has sinced written about articles on various topics from Chapter 13 Bankruptcy, Chapter 7 Bankruptcy and College Student Loan. Jim Power is a writter for the consumer website where there is free lawyer advice for bankruptcy related topics. Please visit. Jon Pow's top article generates over 5400 views. to your Favourites.
James1 has sinced written about articles on various topics from Chapter 13 Bankruptcy, Bankruptcy Law. Author shows the difference between the chapter 13 bankruptcy and the debt settlement process. More Details about and. James1's top article generates over 5400 views. to your Favourites.