Chapter 13 Bankruptcy Rules Explained

Financial hardship can strike anyone at any time. In today’s day and age where too many people lived beyond their means, the financial impact of their indiscretions have come full circle. For many of us we are haunted by the harassing, non stop phone calls from creditors, nasty threatening legal notifications and the flinching when you open your credit card bill. Living this way can cause non stop stress, ware away at marriages and create an ever present state of angst. The good news is that there are solutions to this persistent debt. Filing chapter 13 bankruptcy can bring a stop to credit collections and even stop foreclosure proceedings. Chapter 13 bankruptcy rules are surprisingly easier than you may think. Exploring this credit solution could make a huge impact on your quality of life and allow you to get your financial house back in order.

Chapter 13 bankruptcy rules are much simpler than you may think. The whole process can be executed with a simple form that can be obtained from a local stationary store/document center or downloaded directly from a government website. Chapter 13 bankruptcy is commonly referred to as a wage earners bankruptcy plan. This method of bankruptcy filing uses your monthly income to pay off your existing debts. After filing your petition with a bankruptcy court you will be asked to complete a schedule of assets and liabilities, draft a schedule of income and expenditures, a schedule of contracts/unexpired leases, and a state of financial affairs.

The court will then appoint a trustee to oversee the structure and repayment of the various debts. The trustee will pull together a list of creditors to whom you owe money. The list will include both secured debts and unsecured debts. The difference between the two is that secured debts are often backed by a tangible item that can be repossessed to help off set the balance of the loan in the event of a default. Homes, land, cars and boats are often the most common items tied to a secured debt. Unsecured debts are those which are owed to creditors for services or goods purchased (phone bills, credit cards, insurance payments). The trustee will work with your various creditors to put together a repayment plan that will work for you as well as the creditors. The typical repayment schedule will span anywhere from 3 to 5 years; however, will not exceed the 5 year time frame. As part of the parameters of chapter 13 bankruptcy rules you can not have secured debts over $1,081,400 or unsecured debts in excess of $360,475. Your trustee will negotiate repayment schedules with your various creditors to potentially accept less than the full loan value to full fill the loan amount.

Filing for chapter 13 bankruptcy typically costs very little. Average state filing fees are $235 plus and additional $39 for miscellaneous administration costs. This cost is typically owed upon filing of the petition; however, can vary from state to state. This can be a small price to pay to have the relief brought on from bankruptcy protection. While filing for bankruptcy does have a negative impact on your overall credit score the impact will not be as significant should you default on your existing loans and not meet your creditors obligations.

Chapter 13 bankruptcy has many state specific nuances. It is important that should you consider filing for bankruptcy protection you should consult with your attorney to determine if this is the best option available to you. State to state regulations change they way a filing is determined so it is important for your to do your homework and figure out the specifics as they relate to your situation. Chapter 13 bankruptcy rules offer a great solution to financial difficulties,  but may not be the best chapter to file for you. Explore your options and see what will work best for you.