People who file a Chapter 13 bankruptcy do so in order to keep property in which a creditor has a lien - like a house or car, or if payments are behind and the creditor is about to foreclose or repossess the property. The filing of a Chapter 13 will stop the foreclosure sale and allow the person 3 to 5 years to repay some, but not all of their debts. Rather than wiping out all their debts in a Chapter 7 proceeding, Chapter 13 allows a person to reorganize and pay a certain percentage of their debts over a period of 3 to 5 years. The unpaid balance is discharged after the payment plan is completed. Payments are made from each paycheck to the Chapter 13 Trustee, normally through employer wage deduction.

A Chapter 13 is NOT a bill consolidation loan, although many people look at it that way. Although it is a similar concept, a bill consolidation loan is money actually loaned to you to repay other creditors. In a Chapter 13, no money is loaned to you because you make your monthly payments to the Trustee, who disburses the money among your creditors.

Your priority claims are paid first in a Chapter 13. Priority claims include debts for things like taxes, child support, etc.

The amount you owe unsecured creditors, like medical bills, credit cards, etc. can normally be paid back as low as 5¢ on the dollar. (This figure is not written in stone. It is subject to change depending on your individual State laws, type of debt it is, as well as the income and budget of the debtor.)

You are normally allowed to keep your home, car and everything else you own when you file a Chapter 13 as long as you make regular payments to the Chapter 13 Trustee.

Steps That Occur in Filing a
Chapter 13 Bankruptcy

Read the rest at consumercreditinfo.blogspot.com

Submit articles