Chapter 13 Bankruptcy

Chapter 13 Bankruptcy encourages the debtors to repay part or whole of their debts with benefits of low or zero interest rate. This involves designing a new debt payment structure to make the maximum use of the future earnings so as to repay the creditors. Contrary to the chapter 7 bankruptcy this does not involve converting assets into money , hence the debtor is not subjected to lose his assets. Here the consumer uses his wage to pay the debt. Chapter 13 bankruptcy is sometimes called as reorganization bankruptcy or wage buyer’s bankruptcy.

 

Who can file for Chapter 13 Bankruptcy?

 

The debtors who are subjected to regular monthly income can fit into Chapter 13 Bankruptcy. The repayment process must usually start within 30 to 45 days from the date the case has settled. The creditors are strictly entitled by the law to stick to the repayment plan without any slight deviations or modifications are not allowed to receive claims for debtor.

 

ADVANTAGES:

 

• There is no loss of property in Chapter 13 Bankruptcy since repayment is done by means of income and not by liquidation of assets
• 2) Repayment can be made possible even if there are objections from the creditors until it is approved by the court
• 3) Unlike in chapter 7 bankruptcy, after the completion of the debt payment the consumer is completely let free

 

 Even though the usage of chapter 7 bankruptcy is more common, there are situations in which Chapter 13 Bankruptcy can be applied more effectively since this protects the assets and are popular among wage getters.