Chapter 13 bankruptcy, unlike Chapter 7, involves a repayment plan. The repayment plan is approved by the bankruptcy court and involves an individual paying a feasible monthly payment, while still being able to fulfill their basic needs.
An individual who has filed for a chapter 13 bankruptcy is allowed to keep their assets while paying a monthly fee for 3 to 5 years.
To qualify for chapter 13, your unsecured debts must be less than $250,000 and your secured debts must total less than $750,000. An individual must also have a stable and regular income.
If an individual has considerable debts that may be liquidated and lost under Chapter 7, they may consider chapter 13. Many debts that can not be discharged under Chapter 7 bankruptcy can be removed with a Chapter 13 bankruptcy filing.
For example: if an individual was behind on mortgage payments, rather than stand the risk of losing their property, as with a chapter 7 filing, they can negotiate a payment method with the bankruptcy court.
Even the IRS can be paid back over time if an individual has an outstanding federal income tax balance..
However, the effects of filing for bankruptcy can be fairly psychologically detrimental. (To find out about the effects of bankruptcy click here)
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