CC Brown Law – Reasons for using Chapter 13 Bankruptcy instead of Chapter 7

Oct. 14, 2010 - PRLog -- CC Brown Law: Chapter 13 individual bankruptcy is distinct from Chapter 7 in a number of ways. Instead of financial debt being wiped away in its entirety, an individual may pay off all or a chunk of their debts under the oversight and proper protection of the bankruptcy court. With Chapter 13, in the event the court grants the debtor’s plan for the payment of your debt, the majority of lenders are prohibited from collecting their claims from you during the course of the case. The debtor will have to make steady payments to an individual called the Chapter 13 trustee, who collects the funds paid out by the debtor and disburses it to creditors in the way in which is laid out in the plan. Upon the conclusion of the repayments called for in the bankruptcy plan, the debtor is released from liability for the remainder of their dis chargeable debt. Here we are going to see the reasons to use Chapter 13 bankruptcy as opposed to Chapter 7.

You have a co-debtor on a personal debt in chapter-13 Bankruptcy. If you file for Chapter 7 bankruptcy, the co-debtor will still be liable – and your creditor will unquestionably pursue the co-debtor for money. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor on their own, as long as you maintain with your Chapter 13 bankruptcy plan obligations. You are late on a home loan or automobile loan, and want to make up the skipped payments over time and reinstate the original arrangement. You are unable to do this in Chapter 7 bankruptcy. You can make up skipped payments only in Chapter 13 personal bankruptcy.

In the event that someone has gotten a Chapter 7 personal bankruptcy discharge inside of the last 8 years, or a Chapter 13 release inside of the last 6 years, you can not file for Chapter 7 bankruptcy. You have a tax debt, student loan, or various obligations which can not be cleared in Chapter 7. An individual may include these debts in your Chapter 13 plan and pay them down over a period of time.

You own nonexempt property that you wish to retain. When you file for Chapter 7 bankruptcy, you can able to keep only exempt property – property that is safeguarded from debt collectors under state or federal legislation. You have to pass on your nonexempt assets to the bankruptcy trustee, who will then sell and hand out the earnings to your debt collectors. In Chapter 13, you do not have to give up any property. Instead, you pay off your bills out of your earnings. Therefore, if you have nonexempt property that you couldn’t stand to separate with, Chapter 13 might be the more applicable choice.

You actually have a true wish to pay back your debts, but you require the coverage of the personal bankruptcy court to achieve this. This might be the scenario if creditors are coming after you, or if you merely necessitate the conventional framework and deadlines the Chapter 13 course of action provides so that you can continue on your good intentions.

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