Being so much in debt that repaying your debts becomes well nigh impossible is something that many people find them facing and which leaves them with no alternative but to file bankruptcy in order to get their financial situation back on track. However, as good as it may seem that filing bankruptcy will help you out of such financial mess, it can also lead to much confusion in your mind trying to figure out what is Chapter thirteen bankruptcy and how does it differ from chapter seven bankruptcy.
Understand What Bankruptcy Is
However, before looking at what Chapter 13 bankruptcy is, it would be necessary to first understand the meaning of bankruptcy itself. Bankruptcy is a legal process filed in a law court with the intention of eliminating debts and provides the individual or business that is filing bankruptcy with relief from having to pay off the debts, and thus can make a new start in life.
Chapter 13 bankruptcy may cost you about one hundred and eighty-five dollars to file and it is commonly also referred to as reorganization bankruptcy and such a form of bankruptcy is generally filed by persons that wish to eliminate their debts in three to five year's time. Under Chapter 13 bankruptcy, individuals can keep part of their possessions and also have a means to finance some of their day to day expenses while at the same time still have some money left over to pay off their debts.
So, when you decide on filing Chapter 13 bankruptcy, you will need to present your petition for bankruptcy in which you need to list your schedule of liabilities and also assets. And, following the filing of Chapter 13 bankruptcy, you need to provide a plan for repayment of debts which has already been reviewed by creditor's to see that it does indeed satisfies their requirements.
Filing Chapter 13 bankruptcy is beneficial to you if you want to hold on to some possessions including your home, and in fact, filing for this kind of bankruptcy can, under certain circumstances, prevent foreclosure and such an instance is known as automatic stay which will give you time to catch up on your outstanding debts. It is only after you still cannot meet your debt obligations in the period of reorganization that your home will be foreclosed.
As with other bankruptcies, filing Chapter 13 bankruptcy should be done through an attorney who is an expert in bankruptcies, and even though such a form of bankruptcy has its advantages, there is no denying the fact that the price you will have to pay is high, because you will have a tarnished credit standing for at least ten years, which means that the future will not look good for you if you are considering applying for credit in that time period.
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