hapter 7 and Chapter 13 are two common chapters one can use to file for bankruptcy. In Chapter 13 bankruptcy you do not have to forgo your property in order to pay off the debt. Apart from not involving liquidation, there are several advantages of Chapter 13 bankruptcy that makes it a good choice for debtors. Chapter 13 is more complicated than Chapter 7 and one needs to be understand it well before opting for it.
Eligibility
Everyone cannot apply for Chapter 13 bankruptcy. The first criterion to be able to choose this chapter is that you have to prove to the court that you have a steady income which makes it possible to repay the loan. You will also need to prove that you can meet all your financial obligations such as alimony payment, child
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However, the duration of the repayment plan will depend upon your income and your debt amount. You can easily find out whether you will have to file for three-year duration or five-year duration simply by finding out whether your average monthly income in the six months prior to filing bankruptcy is more or less than the median income for your state. If it is more, you will have to propose a five-year plan and if it is less than the median income, you can ask for three years.
Restrictions To Be Observed
There are many things which make Chapter 13 different from Chapter 7 bankruptcy - one being that a debtor cannot incur more debt without the approval of the court. For example, a debtor under Chapter 13 cannot acquire a car loan.
Amount To Be Repaid Under Chapter 13
Chapter 13 makes it mandatory for you to repay some debts completely. The debts which need to be repaid in full are called priority debts and can include alimony, child support, tax obligations and wages you owe to employees. Your Chapter 13 bankruptcy plan must also maker provision for you to repay your secured debts (debts which gives creditors the right to own your property or car. While planning for Chapter 13 bankruptcy, you will also have to consider repayment of unsecured debts such as credit card or medical bill. You will have to use your disposable income for repaying the unsecured debts. However, you can