Benefits of Chapter 13 bankruptcy
There are many advantages of filing for bankruptcy under Chapter 13 of the US bank code. One of them is that you can keep your home from foreclosure. A foreclosure can be stopped at any time before your home has been sold by the Sheriff. Chapter 13 also allows you to restructure a previous mortgage default by making small payments for a period of 3 to 5 years. This chapter also allows you to discharge a second mortgage, depending on the value of your home. Third parties are protected under Chapter 13 bankruptcy. For loans that need co-signers, they can be exempt under this chapter. This is especially true if the co-signers are liable for consumer debts.
A trustee is appointed when you file a bankruptcy claim under this chapter. This means that you do not have to meet face to face with your creditors. Also the trustee is usually someone who is compassionate. They have no desire to hurt or embarrass you unlike a creditor who may become vengeful over the unpaid debts. The trustee is also someone who is very knowledgeable about Chapter 13 bankruptcy laws. This is important because this chapter is very complex. Also, as long as you show commitment to the plan, the trustee will ensure that your case proceeds smoothly thus reducing your anxiety during the bankruptcy period.
Another advantage of Chapter 13 bankruptcy is that a repayment plan can be approved by the courts even if the creditors do not agree with it. As long as the plan conforms to bankruptcy laws the courts will ensure it is implemented. Your debts will also be consolidated into an affordable repayment plan. This means that the debtor does not have to pay all of his debts. The debtor will make one payment to the trustee and the money is distributed among various creditors. In addition to credit card debt, car loans and other debts can be paid through the trustee. You do not have to stay in Chapter 13 bankruptcy for the whole period. You can also dismiss your case at a later date and convert to Chapter 7, as long as you are qualified to file under this chapter. This is very convenient for a person who is experiencing a short term financial crisis.
Under Chapter 13 bankruptcy you get to keep your car no matter how far behind you are in repayments or even if the car has been repossessed. This is provided you file for bankruptcy before the car is sold by auctioneers. The interest rate on your car loan may also be reduced under this plan. Interest rates at the moment are pegged at 9%. This means that if the interest rate on your car loan is above 9% you may be able to make significant savings on your repayments. Under this chapter you are entitled to a free financial management course. This will help you to learn to manage your money better. You will also learn how to make a budget that works for you and thus saves you from bankruptcy in future.
Understanding Chapter 13 bankruptcy
There are various ways that a debtor can file for bankruptcy. However, you need to be aware that these proceedings can affect your credit rating for up to ten years. You can file for bankruptcy through a debt settlement attorney. Another way you can file for bankruptcy is through the use of federal bankruptcy forms. These are electronic forms that are in either word or adobe acrobat form. The person filing for bankruptcy is not guided in any way while filing the claim and he still have to grapple with the intricacies of bankruptcy laws. An alternative to this is by the use of bankruptcy software where the debtor is shielded for the bankruptcy forms and the intricacies of bankruptcy law. The debtor interacts with the software like in an interview setting, responding to a series of questions. For a debtor who cannot afford an attorney he can use bankruptcy petitioner preparers, who are trained individuals who know how to file claims.
Chapter 13 bankruptcy is a chapter of the United States of America Bank Code which allows an individual to undergo financial administration under the supervision of a federal bankruptcy court. To qualify for this type of bankruptcy the debtor must be earning regular income. The court will prepare a plan for the individual debtor to rehabilitate them from debt. Debtors may be forced into financial reorganization by creditors, but only under Chapters 7 and 11 of the US Bank Code. However, in most cases debtors can choose under what chapter they want to file for bankruptcy. The debtor also has the freedom to convert to another chapter of the bank code especially when he has been forced into bankruptcy.
In contrast, Chapter 7 bankruptcy immediately and completely relieves a debtor of all his debts. The individual is allowed to keep some of his property. The amount of property that is exempt varies from state to state. However, some liens will still remain in place. Debts like mortgage repayments and car loans are still legally enforceable. Various types of debts that cannot be discharged under this chapter include income taxes less than three years old, spousal support, property settlements in divorce cases and student loans. For students’ loans a debtor may institute adversary proceedings although these cases are difficult to win. Remaining assets will be sold by a temporary trustee in order to repay creditors.
The advantages of filing for bankruptcy under Chapters 7 and 13 is that the debtor can stop foreclosure, although it may be reinstated when a debtor has completed his bankruptcy. Also under Chapter 13 a debtor can obtain a discharge from debts that are not dischargeable under Chapter 7. Under Chapter 13 bankruptcy you can keep both exempt and non exempt property. Also for debts needing co-signers they will be protected under this Chapter. Chapter 13 bankruptcy may also be filed immediately after Chapter 7 in order to pay off any remaining debts. The disadvantage of this chapter is that it will appear in your credit rating for a period of 7 years. The legal fees may also be higher.
Exempt property under Chapter 13 bankruptcy
For a property to be exempt from the bankruptcy process there are certain conditions that have to be met. Exempt property is excluded for the bankruptcy process. This means that they are not turned over to the courts to be sold and the debtor gets to keep them. Under Chapter 13 bankruptcy any property that is used by the debtor to earn a living is exempt. For example a musician cannot have his or her expensive musical equipment sold to clear debts. Traditionally, these items were limited to things you can hold in your hand but nowadays more items can be included in this category. For example, a traveling salesman can have his motor vehicle exempt on the basis that he might use the car for business travel.
A debtor may get to keep some animals that he or she owns under Chapter 13 bankruptcy laws. Such animals include pets and livestock. In some states they only regard domestic animals which are livestock but not pets. Also a home owner may claim homestead exemption. This allows you to keep a certain portion of your property. Home owners may also claim burial exemption. This may be for cemetery plots, crypts or monuments. In some states you can only get burial exemption if you do not also claim homestead exemption. The courts will also allow you to keep family heirlooms. These are items that have been handed from generation to generation. These items are of sentimental value and are usually priceless.
Other property that may be exempt under Chapter 13 bankruptcy laws are things that you need to keep yourself in good health. These may include crutches, wheel chairs, or hearing aids. Some states may allow you to keep some home furnishings like carpets, heating units and furnaces. For a farmer he can be allowed to keep his farm tools. In some states these are items that you can hold in your hand like hoes, pitchforks, shovels and scythes, while in other states you may include larger farm implements like tractors, ploughs, harnesses, reapers and other large farm tools. Some crops which are harvested once yearly can also be exempted. Oranges from your orchard may be exempted. But the tree itself is not exempted.
Homeowners may also be exempted for building materials that are used to build or to make improvements to your structures. These may include items like lumber, brick, and cement, iron sheets paint or varnish. This exemption is however not available in all the states. There are exemptions in Chapter 13 bankruptcy that cover weapons and other items that are part of a soldier’s uniform like belts but not the uniform. Some household property that runs on electricity, gas or propane may be exempted. These items include refrigerators, dishwashers, vacuum cleaners and washing machines. Some items that are of a permanent nature and are not consumed like food may also be exempted. These are items like linen, household utensils, pots and pans, and small electronics like radios, microwaves and even toasters.
The Role of an Attorney in Chapter 13 Bankruptcy
Although hiring a lawyer is an expensive affair especially for somebody claiming bankruptcy, it is a much needed service and it will help the debtor avoid the intricacies of Chapter 13 bankruptcy laws. The first thing that the attorney will do is to analyze and quantify the debt owed in order to find out if this is the best route for the debtor to take in order to solve the financial mess that is created. After this, the lawyer will help the debtor to prepare his estate before bankruptcy proceedings can start. This is to ensure that as little property as possible ends up in the hands of the trustee who has been appointed to help the debtor in debt repayment.
The second thing that the attorney will do in Chapter 13 bankruptcy cases is to review the history of the debtor when it comes to paying debts. The attorney will thereafter prepare a financial reorganization plan that will be informed by the debtor’s situation and must conform to bankruptcy laws. The plan also has to be a practicable solution to the financial mess that the debtor finds himself or herself in.
The attorney in a Chapter 13 bankruptcy case will then prepare petitions, schedules and other paperwork that need to be filed with the courts. The attorney will also obtain any injunctions or restraining orders that will be necessary. He will then determine if the client needs some financial coaching. If he does the attorney will file any certificates that will be issued by a competent financial training institution. This education is also provided free of charge, and is usually a 2 hour class.
The attorney in a Chapter 13 bankruptcy proceeding will then deal with issues brought about by redemption or affirmation. In case of redemption, the debtor may be allowed to keep some property, like a motor vehicle that is acting as security for a secured debt. This option is however not possible in Chapter 7 because the law requires a debtor to come up with cash up-front.
The financial reorganization plan will then be filed by the attorney. He will also put notices to that effect. The attorney will then accompany the debtor to meet the creditors. They will then chart the way forward in the presence of the interim trustee. The attorney will also address any issues raised by either the trustee or the creditors concerning the financial reorganization plan or any other documents that may have been filed in the courts. The attorney will also attend the financial reorganization plan hearings and if there are any changes to the original plan then he will address them. Modifications to the financial reorganization plan may be made necessary due to changes in circumstances. The economy may have improved or the debtor may have won a lottery. If that is the case the attorney will then have to prepare and file amended schedules brought about by the debtors change in circumstances, or as required by the courts handling the Chapter 13 bankruptcy case.
Who Is Eligible For Chapter 13 Bankruptcy?
Chapter 13 bankruptcy laws only allow individuals to file claims. A husband and wife may also file jointly. For businesses in which you are the sole proprietor or in a business partnership, you may file under your own name for debts that you are personally liable for. However, stock brokers are not allowed to file for bankruptcy under this chapter. Also for one to qualify to file under this chapter you should not have discharged another bankruptcy in the last two years. You will have to wait until the requisite time has elapsed.
For an individual to qualify for Chapter 13 bankruptcy, he or she has to undergo a credit counseling course. They should have completed the course of 180 days before filing for bankruptcy. Also the counseling should come from an approved institution. If the institution created a debt management plan for the debtor, they must provide a copy of this along with the certificate. Or they may provide the certificate 15 days after filing their bankruptcy claim. The debtor must also have debts of less than $336900, which may be non-contingent, liquidated or unsecured. For secured loans the debts should not amount to more than $1,010,650.
An individual also has to have filed his income tax returns for the previous 4 years in order to qualify for Chapter 13 bankruptcy. They must provide the trustee with a transcript of the most recent income tax returns that have been filed with the Internal Revenue Service. Your repayment plans should cover all the required debts. Unsecured debts like child support, spousal support and other taxes that cannot be discharged are considered priority debts and must be included in your plan to repay. Secured debts like mortgages must also be covered. Other debts that are considered a priority include court fines and other charges levied by the federal government.
Finally, a debtor has to have sufficient income to repay the debt. You should have enough income to cover all your expenses and other sanctioned payments. The trustee also needs to get paid. This will be based on a commission of all payments that have been paid through them. You can also include income from your spouse even if you have not filed jointly for bankruptcy. Your income may come for self employment, seasonal jobs, social security benefits or even unemployment benefits. Other types of income which can be used to file a claim under Chapter13 bankruptcy include commissions and royalties, disability or worker’s compensation benefits. If you receive child and/or spousal support you can also use this. You can even include payments made to your pension fund. A debtor also has to be able to repay a certain amount of unsecured debts. Since chapter 13 allows a debtor to keep a certain amount of non exempt property, they need to show that they can repay non-priority unsecured creditors an amount that matches the value of the non exempt property that they intend to keep. Non exempt property may include things like jewelry, stamp collections, family heirlooms or expensive musical equipment unless the debtor is a professional musician.
What You Need to Know About Chapter 13 of the Bankruptcy Code?
There are many of us who do not know what bankruptcy involves. Some of us have heard of “chapter 13 bankruptcy”, but do not know what it entails. The bankruptcy code (America) was put in place to help those that are bankrupt to pay off those they owe money at a low interest rate or at a time when they can get money to do so. Chapter 13 of the bankruptcy code allows one to use whatever resources are available to pay his or her debts. However, this option is only open to people who have a standard flow of income.
This law was put in place to ensure that those who file for bankruptcy pay back what they owe others but with the supervision of a court. The time period given to a person to pay debts is five years. One must be wondering how this process takes place. The court in most cases gives the debtor the chance to keep his or her property and also puts in place a plan. This plan helps the party to pay all his debts at a lower interest rate (or no interest at all). This is done to help the party find ways of paying the creditors as soon as possible.
It is the trustee of the party who has filed for bankruptcy who makes the payments to the creditors. The Bankruptcy Code requires that both the creditors and the person who has filed for bankruptcy must all consent to the plan that has been put in place by the courts. However, one of the exceptions to this is that even though the creditors do not accept the plan that has been put forward and the court affirms it, then it will be executed. In case one who is bankrupt is able to follow this plan and pay off his or her debts early, then he or she is discharged.
In case one wants to file for Bankruptcy under chapter 13, he or she can approach a lawyer who will advise him or her on what to do. According to the bankruptcy Code of the United States of America, the major pre-requisite is having a steady flow of income so as to pay off the creditors as soon as possible. One must first of all evaluate himself and see whether this is the best option left for him to pay debts. One must be sure that he or she has organized a budget in place to deal with the plan that has been put in place. Devise mechanisms that you will use to raise the money that must be paid back to the creditors. One must also make sure that his or her pleadings are organized as well as the requirement of paying court fees fulfilled. Attendance to every meeting between the creditor and debtor is crucial to one when filing for bankruptcy. If you decide that you want to be bankrupt, approach a legal advisor, he or she will unveil lots of information you may be ignorant of.
Chapter 13 Bankruptcy and other forms of Bankruptcy
Have you ever denied the truth and yet it is practically the reality? Many of the people are bankrupt but do not know which form of bankruptcy they are experiencing. You must be very careful when spending your money or paying for goods on credit. This article is a chance for each and every one to check and evaluate his or her financial standing. If you are still denying that you are bankrupt, then it is time you considered the following forms of bankruptcy that are clearly provided for by the law.
These forms are clearly named in the Bankruptcy Code (America). The first type of bankruptcy is the one provided for in chapter seven of the Bankruptcy Code. It is normally called liquidation. It involves a person called a trustee being in charge of one’s property and therefore having the right to sell off anything so long as he or she is going to use it to pay the outstanding debts. In most cases, if liquidation pays half of the debt, the remaining balance is left unpaid. The sole purpose for this is to use the debtor’s property to settle his debts as soon as possible.
Another form of Bankruptcy is the one found in chapter 11 of the Bankruptcy Code. This entails one filing for a bankruptcy in a court. It is more complex and tasking than the other forms of bankruptcy. It also involves the debtor coming up with a plan of how he or she intends to pay the creditors. The most difficult step in this form of bankruptcy is convincing the creditors that the plan will be effective and that they will be paid. This chapter, however, applies to corporations as well as companies.
Bankruptcy can also take the form mentioned in chapter 12. According to this form of bankruptcy, one continues to own his or her property but must device an arrangement between him and the creditors that will be used to pay the creditors. The last form of bankruptcy is the one mentioned in chapter 13 of the Bankruptcy Code. Unlike chapter 11, this chapter involves an individual coming up with the plan that will be used to pay the creditors. This plan must be approved by both the debtor and creditor. However, in case the creditors oppose the plan, the court can accept so long as the debts are paid off.
In order for this to work out well, one must be willing to attend all meetings with his or her creditors so as to follow up the events. In case you are thinking of filing for bankruptcy, these forms of bankruptcy should be considered. For more information as far as these forms of bankruptcy are concerned, one must contact his lawyer as well as a financial advisor to help him or her understand the state in which his or her finances are in. It is usually advisable that one must try as much as possible to avoid being bankrupt because it is very embarrassing. Check out how you spend especially using your credit cards.
Chapter 13 Bankruptcy and Its Consequences
When you file for bankruptcy, do you know the consequences that come afterwards? Many people are not sensitized about what happens when one is bankrupt. It is not a pleasing situation. You must be thinking that since you have some time away from demanding creditors, then this is situation that will wipe away all the debts. However, no one should think that way, because not paying the money owed to your creditors is a crime that involves a penalty of imprisonment as well as compensation. The best option is to avoid taking debts and accumulating them.
When one is announced bankrupt, all his or her belongings are put forward to clear the debts. This includes tangible items as well as those that are not; for instance shares in a company, treasury bills as well as any sort of investments that he or she has made. Therefore, a bankrupt person does not own property, because it will be used to pay off all the debts that his or her creditors demand. If you think that the property you have while bankrupt is yours, then you are mistaken. Hence, bankruptcy is not a comfortable situation for anyone who files for it.
For those that have a family home, bankruptcy should be a situation that you avoid. In most cases families occupy large estates of land so if one is bankrupt then the land that belongs to his or her family can also be taken away. The trustee has power to sell the family residence so as to pay off creditors that are demanding money from the debtor. In most cases, the trustee puts up the estate for sale by auction; the highest bidder with the highest price takes it.
For those who are self employed, a person can keep on working so long as he or she is receiving the income to pay off debts that have been incurred. The trustee in charge of the bankrupt person is allowed to accept any type of contributions from anyone so long as it is meant to fund the bankrupt estate. In case one put any of his properties as security, then they are likely to be taken by the bank or any organization. That is why it is important for one to never put his property as security for loan. Many times, when filing for bankruptcy, he or she can end up being imprisoned or made to pay compensation.
Socially, bankruptcy is not good because it causes people not to trust you as well as discriminate you. In addition to that, being named bankrupt can affect your mind in ways that are negative to your health. Instead of thinking positively, one may end up being hopeless and discouraged. As a result of this, you may end up in to a depression which is likely to cause a heart attack and eventually death. Hence being bankrupt makes one’s credit worthiness to be considered by those that provide services to him or her. You should think twice before you take a loan.
Why You May End Up Filing for Chapter 13 of the Bankruptcy Code
It is hard not to do without spending. We are all likely to spend on something every day. For instance one will have to pay money in order to get services like water, electricity, fuel, gas, insurance, medical bills as well as food. There is a common saying that one pays tax from the moment that he or she steps into this world until death. Therefore, spending is inevitable, especially as far as having necessities is concerned. Apart from the necessities, you may spend on a few luxuries now and then for instance: shoes, clothes, the sauna, going to the club, a wedding and so many other things.
However, when you suddenly become bankrupt, the number one question is; how did I end up down this road? There are many reasons why people are likely to file for bankruptcy. First and foremost, studies have clearly shown that one of the major causes is payment of medical bills. In some circumstances where one is ill, he or she is likely to spend a high price on treatment especially if the situation is critical for instance paying a neurosurgeon or gynecologist. Hospitals do not charge cheaply, therefore one may end up spending his or her savings on these bills.
The second major cause of bankruptcy is the credit card debt settlement. Many people have resorted to buying goods on credit which has led to them having high debts to pay off. Buying goods on line is the major cause of bankruptcy especially for women who like spending on luxuries rather than necessities. As a result of this, President Barrack Obama has proposed a scheme that can be used to settle the problem of credit card debt settlement. Furthermore, some people become bankrupt as a result of law suits. Civil cases require that one should compensate the injured party. Therefore, one may end up paying money that amounts to millions to the injured party.
Furthermore, bankruptcy can also be caused by unemployment. The rate of people graduating from schools is overwhelming, yet the numbers of jobs present are less. Many people are also being laid off and others are retiring and therefore one may find him or herself unemployed without a source of income thus filing for bankruptcy. In case you are one of those people who get loans whose interest rate is high, then be aware that bankruptcy is around the corner waiting to challenge you.
Many times, people borrow money without knowing the interest charged and when the bank comes after the only piece of property they have as security, they end up penniless. Divorce is also one of the major causes of bankruptcy. You should always be careful when you file for divorce. Paying a lawyer for his or her services is not cheap. Child support is also another expenditure that one must meet. Furthermore, the courts require a man to pay his wife money even after having divorced. Thus be on the lookout for all these causes.
The Fight against Chapter 13 Bankruptcy
There are times when you face certain challenges and wonder how to come out of them. Be strong, there is always hope even when it seems so hard to believe. Bankruptcy is a situation that any of us is likely to face with or without knowing. However, there are some guidelines that one can bear in mind before he or she gets into this scenario. Always have this in the back of your mind whenever you are out on the street because bankruptcy is like a lion is waiting to pounce on a zebra, so be on the lookout everyday of your life.
Whenever you’re out every day, avoid those places that are likely to tempt you into spending your money. It has been said that what you don’t know, does not hurt. Hence what we do not see will not prompt us to spend. If you are one of those women who like to go shopping for the latest shoe, dress or purse, desist or teach yourself not to go to the malls where these items are. The eye is the one that creates the temptation of overspending. Therefore, if you keep away from these places that are likely to make you spend your pay check, then saving the money will be the best option.
Another option that one should always consider is that when sued, mitigation or alternative dispute resolution is the best solution. We all know that court processes are long, dragging and expensive especially when it comes to civil litigations. Alternative dispute resolution is when the person suing and the one sued come to an agreement in terms of compensation without going to court. This can be done by an arbitrator therefore the case can be settled there and then. This is an out of court settlement that can help one not to spend in terms of paying the injured party.
In addition to what has been mentioned above, one should always take extra care when getting a loan from the bank or any lender. The first step to this is not to sign the loan agreement without having proper advice from a lawyer or your financial adviser. Many times we want the money so badly that we are willing to risk our properties and yet there could be other alternatives to this. Take caution that the bank manager may smile while giving you this loan but he will be screaming when asking for his money with extra interest or taking your property.
Each and every individual ought to attend credit card counseling classes. This is necessary because many times, we misuse the credit cards that are given to us by purchasing goods on line as well as in malls or shops. If you do not trust yourself with credit cards, the best option is to go for this type of counseling as it will train you on how to save more. Therefore in order to avoid bankruptcy, one should ensure that he or she handles his or her money with care.
Chapter 13 Bankruptcy Lawyers
The current economic meltdown has more and more people looking for chapter 13 help, but many of them don't have any idea where to start looking or whether or not chapter 13 bankruptcy is something that you should pursue to help clear up your financial problems and get out of debt. One thing that is absolutely certain is that you are even considering filing bankruptcy; you need Chapter 13 help from a debt settlement attorney or a bankruptcy lawyer.
The reason for this is that the laws that surround filing for bankruptcy are all but incomprehensible to someone who hasn't spent a good portion of their life studying it, especially if you're looking for a credit card debt settlement. This compounded by the fact that the laws tend to change from year to year and the fact that different laws can apply in different states. If you need to file for Chapter 13, then you need Chapter 13 help.
Chapter 13 used to be a way to pay off secured debt while not losing the underlying collateral, but recent changes to the law have expanded it to include credit card debt settlement in some cases, often against your will. This was, not surprisingly, part of a recent bill sponsored by credit card companies to make sure that they are able to collect some of their unsecured debt.
Although you need to consult a bankruptcy lawyer or debt settlement attorney for more detail and to find out which is the right option for you, you basically have two options when facing bankruptcy as an individual; Chapter 7 or Chapter 13. They both have advantages and disadvantages, which is exactly why professional help is necessary.
Chapter 7 bankruptcy is liquidation bankruptcy, where basically they take everything you own, minus certain exemptions, sell it off and give it your creditors. Once this is done, you debts are discharged and you won't, generally speaking, have anything more to pay. This is the most common form of bankruptcy for individuals
Chapter 13, by contrast, is more like a structured payment plan. A trustee determines what you can reasonably pay based on your income and expenses, and then you make payments until the debt is discharged. This now includes some forms of credit card debt settlement, and you may not have a choice whether to file this or Chapter 7.
Regardless of whether you are filing for Chapter 7 or Chapter 13, help is a must. The earlier you can professional advice, the better and easier your resolution is going to be, so make sure you consult a debt settlement attorney or bankruptcy attorney.