Chapter 13 Bankruptcy Debt Discharge

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Bankruptcy is a common occurrence in the United States as thousands of individuals and businesses each year find themselves in unresolvable debt. Bankruptcy can be either defined as the legal inability to pay debts or having been determined financially insolvent. There are several different types of bankruptcy including Chapters 7, 9, 11, 12, 13, 15.

Chapter 13 bankruptcy is one of the most common types of bankruptcy. It has many different names such as reorganization bankruptcy, or wage earner's plan. Chapter 13 bankruptcy allows the debtor to use their income to pay all or some of what is owed to creditors over a specific period of time. The time allowed is typically from three to five years, depending on several factors including: how much you earn (income) and the amount/size of the debts. It's basically a plan for living in bankruptcy.

Obtaining chapter 13 bankruptcy protection can be a grueling process, and because the bankruptcy laws involved can be very complicated, you should consult a bankruptcy lawyer to help you with your filing. Experienced chapter 13 bankruptcy lawyers will know the ins and outs of the legal system, and they will be able to discuss the mechanics of bankruptcy and other possible alternatives or options if necessary.

Once your bankruptcy lawyer has determined that you meet the requirements and are eligible for chapter 13, meaning that you meet certain income requirements, they will oversee your case including filing, administrative tasks, filing your payment plan, etc. These requirements include: your debt isn't considered too high, and you have attended credit counseling sessions by an agency approved by the United States Trustee's office.

A creditor has the ability to object to a plan that is made in Chapter 13 if they do not believe it meets the best interests of the creditors test or the best efforts test itself, or if they don't believe the debtor has done the proposal of the plan in good faith. Another objection that occurs is the amount of value that is placed on what the creditor considers collateral. If a compromise can't be reached between the debtor's counsel and the objectors, then a judge will make a decision.

Some of the cons associated with filing for Chapter 13 are that certain debts cannot be discharged or waved away.. Certain taxes, forfeitures and reimbursement, governmental fines, child and spousal support, and drunk driving fines may not be discharged. There are also creditors who could retrieve collateral such as a home or motor vehicle if they have security interest in them, and this is even after the bankruptcy, unless the debts are reaffirmed by the debtor. There will also be large tax consequences, as well as disrepute from the bankruptcy, so easy credit is not attainable because they are seen as financially or socially negligent.

While living in Chapter 13, there are few restrictions on the debtor. They have to follow a plan payment and they cannot incur a large amount of new debt unless it is with the court's approval. They can change a job or move easily, though they will need court approval for an advance in getting a new car loan, as well as if they are refinancing, selling, or purchasing a home. A plan can also be modified if there are certain issues such as the loss of a job or ill health or any type of interruption of income.

At the end of filing for Chapter 13 is a discharge, which is the legal forgiveness of debts. After this discharge is entered into the system, no creditor involved with the debtor who were aware of the bankruptcy can attempt to collect debt unless it was for a non dischargeable debt (which includes domestic support, student loans not paid in full, or criminal restitution).

If you decide to move forward with Chapter 13, a Chapter 13 bankruptcy lawyer will explain the risks to you and your financial future, as well as offer other possible alternatives to bankruptcy. Keep in mind that a bankruptcy lawyer will also have extensive knowledge about debt management.

If you are ready to contact a Chapter 13 bankruptcy lawyer to explore the possibility of Chapter 13 or other debt relief options, visit the American Bar Association ( ABA ) website. The ABA features a lawyer locator which allows the user to search bankruptcy lawyer profiles in your local area. Access to the site and profiles is free.

1.1 million people in the United States filed for bankruptcy in 2008, and that number may only increase as financial situations continue to worsen. People may need help getting through the bankruptcy process, and move on to the recovery process.


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