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.

---

Learn The Five Key Debt Reduction Steps You Must Take Immediately!

Step 1. The purpose of this first step is to... Read More

How to Deal with Bill Collectors

So you've screwed up. You're drowning in debt. Maybe the... Read More

Help for the Single Mother with Managing Credit and Debt

Today's consumers benefit drastically from the usefulness of credit. Credit... Read More

Save Money When Going Out

It seems as though whenever we go out for the... Read More

A Debt Elimination Process Must Be Initiated From You.

The first and maybe most important step in a debt... Read More

Bankruptcy: What the New Law Means to You

On April 20 of this year, President Bush signed a... Read More

Budgeting and Debt Management

Debt management (specifically unsecured) is the first step to taking... Read More

Debt Help and Advice for the UK

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

Corporate Debt Management ? Perspective on the Why

Entrepreneurs have a tough time in their formative years. They... Read More

Debt and Your Dreams

You may not realize what that credit card bill is... Read More

Help to Get Out of Debt

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

Why You Should Get Out of Debt Today?

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

What Does A Bankruptcy Trustee Do?

Once you file bankruptcy a court appointed bankruptcy trustee will... Read More

How to Reduce Your Debt in 5 Easy Steps

If you have incurred substantial personal debt, consider these options:... Read More

Whatever You Do....Dont Save Money!

No, that's not a misprint. Even though falling interest rates... Read More

New Bankruptcy Law Will Not Protect You from Identity Theft

Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy... Read More

The 7 Secrets to Getting?and Staying?Out of Debt

As vice president of the American Credit Foundation, a nonprofit... Read More

Questions to Ask a Credit Counseling Service about Debt Relief

Debt relief is a topic on a lot of consumers'... Read More

Debt Consolidation and Personal Finances: Learn the Truth!

An inability to manage credit, growing debt and bankruptcy are... Read More

Establish Money Saving Goals For Added Success

Having something tangible to strive towards can work wonders for... Read More

Individual Voluntary Arrangements- A New Alternative to Bankruptcy

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

What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way

We have all experienced getting so far in debt we... Read More

How to Negotiate Debt Settlement

People over extend themselves financially as a result of a... Read More

Free Quick and Easy Money Saving Tips ? Part 2

Although many consumers would argue differently saving money doesn't have... Read More

Debt Problems? You Can Negotiate With Your Creditors

It is always possible to negotiate with creditors ? even... Read More

Learn How to Get out of Debt

Debt is becoming number one problem in the United States... Read More

Tips For Saving Money

Still living from pay to pay? Or envying those great... Read More

Debt Relief with this Simple Formula

Is there a way to get out of debt without... Read More

Debt Reduction, a Necessary Endeavour

Massive debt is something many Americans face. Debt reduction is... Read More

How to Avoid Bankruptcy

Bankruptcy is a legal way to offer folks with high... Read More

Creating A Realistic Budget

Budgeting -- ooh, what a scary word! If you want... Read More

Start Small and Your Wealth Will Get Bigger

We've all heard the phrase, "You have to start somewhere."... Read More

Stop Debt Collectors

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