Chapter 13 is a form of bankruptcy that allows qualified individuals or a small business owner the chance to repay his or her outstanding debt and keep the assets. A bankruptcy lawyer in Salt Lake City is best suited to advise if chapter 13 suits your situation or would chapter 7 be a better solution.
The differences between chapter 13 and 7:
The primary purpose of chapter 13 bankruptcy is to enable the debtor to keep assets that would be turned over to the trustee for liquidation if Chapter 7 bankruptcy were being declared. In the majority of cases If you file for either chapter 13 or 7 you will be allowed to keep your house and car. Under chapter 7, any rental properties owned by the debtor would be liquidated as would antiques and collectables.
Chapter 7 bankruptcy allows the debtor to get a fresh start by discharging almost all debts. Under chapter 13, however, you still have to repay your debts before you are discharged from bankruptcy. There are advantages to filing for chapter 13 for certain people.
Who can file for chapter 13 bankruptcy?
The only person who is allowed to file is an individual who has incurred, on the date of filing:
* Unsecured debt of less than 250 thousand
* Secured debt of less than 750 thousand
* All of these debts must be for a fixed amount and have no conditions attached.
What are the benefits of filing for chapter 13 bankruptcy?
A bankruptcy lawyer in Salt Lake City will tell you that chapter 13 protects you from collection efforts, lets you keep your personal property and all real estate and gives you the opportunity to repay all your debts through a reduced debt action plan. As you will repay your debt, your filing for chapter 13 will remain on your credit history for a shorter period of time than chapter 7.
How long does it take to pay off the accumulated debt?
The time frame for debt repayment is determined by the amount you can afford to pay after all necessary living expenses have been taken into account. Necessary expenses include insurance premiums, mortgage payments, etc.
The typical time frame that the court looks for is three years, but in no case will the court allow the repayment period to exceed five years. If for example your payment analysis shows you have the ability to pay $300 per month over your normal living expenses, the trustee that has been assigned by the court will disperse this amount every month for the agreed-upon period. At the end of the period you become discharged from all debt regardless of whether your creditors were paid in full or not.
