Chapter 13 bankruptcy is completely different from chapter 7. When you file for chapter 13, you are making a plan to repay your debts instead of forgiving all of them. The creditors will get some money. However, the amount that you owe in debt will determine how much if any the creditors will receive. All secured debts are paid before unsecured debts. If you take the full three to five years to pay secured debt, chances are the unsecured debts will not receive any
payment, but will be discharged. The nice thing about chapter 13 is that you do not give up any property.
For instance, if you have a house payment that you have fallen behind on the payments by a couple of months and you owe some back property taxes, you can keep the house and pay the monthly payments plus the fees to the trustee every month to repay the outstanding balance. If you have any credit card debt that is not secured, these debts are last to be paid if any time remains. The unsecured creditors are paid a few cents on a dollar depending on the size of your secured debt. Filing a chapter 13 bankruptcy will help many people keep their homes and other assets that would otherwise be sold to pay any debts if you were to file a chapter 7.
Understanding a chapter 13 bankruptcy is important for all consumers. The first thing to understand is that you have to have enough income to pay your monthly debts and living expenses. After the expenses are calculated, the remaining income will apply to your debts that are filed under a chapter 13. For instance, if you have three hundred
dollars left over to pay your debts that money will be given to a trustee every month. The trustee then distributes the monies to the proper creditors.
The trustee is a person that is assigned to you for the term of the filing. Every month, you must give the trustee the amount agreed on or you will forfeit the bankruptcy agreement. Included in this money is the trustee fee and secured and unsecured debts. In some cases, the remaining lawyer fees are included in this as well. It is very important that you pay the monies on time every month. If you miss just one month, you will void the agreement and need to look for an alternative, which may be a chapter 7.
When you file a chapter 13 bankruptcy, you will also be giving up one half of your income tax refund every year. This will be for three or five years depending on your time allotment by the court. The income tax refund money is applied to the unsecured debt that may not receive any type of payment at all. You should not take on any new debt during the chapter 13 bankruptcy. This could cause you to fall behind on your bankruptcy payments and result in a termination of the court agreement.
For more information about Chapter 13 Bankruptcy and debt relief, go to www.debt-relief-advice.info
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