What Is A Chapter 13 Bankruptcy?

Many consumers that are bogged down in debt frequently turn to bankruptcy as a form of restoring their financial status back to a zero balance. Unfortunately many of these same consumers are confused when it comes to the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy. This quick article will explain what a Chapter 13 bankruptcy actually is and what it does for a consumer that files this form of debt relief.

Before explaining what a Chapter 13 is I want to make sure that you are familiar with what the definition of bankruptcy actually means. It is basically a legal process that is filed in a court of law. The reason for filing this debt elimination strategy is to relieve individuals or businesses that cannot pay their current financial obligations of those same debts. This allows them a fresh start on their finances.

A Chapter 13 bankruptcy which normally runs around $185 to file is commonly referred to as reorganization bankruptcy. This form of debt elimination is filed by consumers that wish to ay their debt off between a period of 3 ? 5 years. This is a preferred strategy for individuals that wish to actually keep some of their possessions and have the means to financially meet their normal living expenses while still having money left over to pay towards their accumulated debt.

When filing a Chapter 13 the individual will present a bankruptcy petition which list the consumer's schedule of assets and liabilities. Immediately following this the person filing bankruptcy will have to present a repayment plan that is carefully reviewed by the debtor's creditors to see if it meets their needs. If there are no objections or points of argument then both the creditors and consumer filing bankruptcy must follow the reorganization plan.

Additional confirmation tests remain before a reorganization bankruptcy takes place. One of these tests compares the amount that the unsecured creditors will receive under the plan to the amount they would receive under a Chapter 7 bankruptcy. Basically what this means is that all unsecured creditors must be able to receive the same amount of monetary compensation under a Chapter 13 as they would for a Chapter 7. A final test requires that the individual filing bankruptcy must also pay all of their disposable income into the repayment plan.

A Chapter 13 is especially beneficial for consumers interested in keeping on to some very important possessions such as their home. For instance if the consumer has missed several house payments and is facing the scary possibility of a foreclosure they can effectively halt the foreclosure by filing for Chapter 13 bankruptcy. This is normally referred to as an automatic stay. This allows time for the consumer to catch up on missed payments. If the individual is unable to effectively catch up during this reorganization period then the foreclosure proceedings will continue as before.

When it comes to a Chapter 13 or any other form of bankruptcy it is highly recommended that an attorney who is knowledgeable in bankruptcy law be consulted in order to receive the most accurate information. One additional note - although a bankruptcy can restore an individual's financial status it does so with the high price of that same consumer's credit suffering a blemished record for about 10 years making it difficult to obtain future credit when needed.

Timothy Gorman is a successful webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, consolidation and bankruptcy information that you can research in your pajamas on his website.

---

Bankruptcy - Is It The Right Choice For You?

Bankruptcy is one of the tougher choices we as adults... Read More

Craving For Financial Freedom

Have you ever felt trapped in a Rat Race and... Read More

Credit Repair - Understanding The Basics

What is Credit?Credit means that you are using someone else's... Read More

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead... Read More

Debt is The Master of Souls

Wholeness requires separation. In order for you to experience yourself... Read More

Credit Card Debt Freedom is Possible

Credit card debt have you drowning financially? You're not alone.... Read More

Bankruptcy - The Easy Option?

Incredibly, since the changes in the bankruptcy law in April... Read More

Utah, the Nation?s Bankruptcy Capital

Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection... Read More

How to Protect Yourself: Debt Collections

So you are getting collection calls? You're desk is full... Read More

Debt: Dont Pay Your Minimum Balance

Almost all Americans carry credit card debt. Actually, over 40%... Read More

Tips To Take Control Of Debt Collection

Yes, debt collection tips can help. You may think you... Read More

Bouncing Back from a CCJ

Should you be unfortunate enough to face a CCJ ?... Read More

Bad Credit Home Loan To Get You Out Of Debt

A "bad credit home loan" can help you climb your... Read More

Life on a Debt Management Program

Signing up for a debt management program is easy; it's... Read More

Solutions to Single Mothers in Debt

As a single mother, lets admit it, times get tough.... Read More

Think for a Change

I'm not sure where it originated, but I've heard it... Read More

Out of Credit Card Debt - Without Filing Bankruptcy

To be out of credit card debt is your dream... Read More

Why You Should Get Out of Debt Today?

The main reason for getting out of debt today, is... Read More

Are You SURE Your A Bad Debt?

Many people who seek the advice and guidance of debt... Read More

Bankruptcy - The New Scarlet Letter

Nathaniel Hawthorne's book The Scarlet Letter states in Chapter 2,... Read More

Dont Drown Your Debts, Manage Them!

Are you among the millions of people who have found... Read More

5 Options Toward Debt Relief

If you are in debt, well over your head in... Read More

Drowning in Debt? Tips and Tricks for Getting Out of Hot Water with Creditors

Do you, like millions of other Americans, feel like you're... Read More

What is Bankruptcy?

Personal bankruptcy is a legal way to give people with... Read More

Credit Card Debt Elimination

Credit card debt elimination can be done with a good... Read More

Help to Get Out of Debt

Debt Help is the stepping stone to debt elimination and... Read More

Individual Voluntary Arrangements- A New Alternative to Bankruptcy

This May, the Department of Trade and Industry in the... Read More

Taking The Plunge Into Bankruptcy

Bankruptcy is one of the most difficult things a person... Read More

Stop Debt Collectors

Can you stop debt collectors ? . . .You better... Read More

Debt Help and Advice for the UK

At some time or another during our lives most of... Read More

How To Avoid Medical Collections

With medical collections costing doctors millions upon millions of dollars... Read More

Debt Negotiation and Debt Settlement

Debt negotiation and settlement can give you a drastic reduction... Read More

Five Hot Tips To Get Out Of Debt Forever

The financial and psychological burden of being in debt causes... Read More