When you hear someone file for a Chapter 13 in relation to his financial capability, it actually references Chapter 13 under the Bankruptcy Code. The intent of this law is to provide someone who is in debt to have the opportunity to pay off all outstanding debts with better terms and usually with lower or even no interest charges. It is differentiated from Chapter 7 in the sense that it does not necessarily require the debtor to liquidate his assets, but rather, restructure debts to make it possible to pay off debts based on his current financial capability. Therefore, one of the requirements for filing Chapter 13 Bankruptcy is that the debtor must have a regular source of income.
The law also explicitly provides the debtor with a 5-year ceiling to pay off all outstanding debts to all creditors. The attorneys are responsible for safeguarding the interest of the debtor with the whole process initiated and completed under the direct supervision of the courts. Many people who are in dire financial conditions opt to file for a Chapter 13 Bankruptcy in order to lessen the impact on their credit standing, as well as have a chance to get back on their feet with the majority of their assets intact. Here are other provisions that will help you to better understand the concept of Chapter 13 Bankruptcy.
- The entire process begins with the filing of a petition with the bankruptcy court that has jurisdiction over the residence of the debtor. The petition should be accompanied by the schedules of assets and liabilities, current income and expenditures, executor contracts and unexpired leases and statement of financial affairs of the debtor. It is not entirely impossible that the bankruptcy court may require additional documents from the debtor. Anticipated income and any increase thereto after filing must also be given to the court. Husbands and wives have the option of filing for either a joint or individual petition for Chapter 13 Bankruptcy.
- You must be prepared to pay corresponding filing and administrative fees when you intend to use the Chapter 13 Bankruptcy law. The clerk of court is usually the one who receives the payment upon filing of the petition. It is possible to request to the court that the fees are paid in installments, up to a maximum of four payments. The final payment must be made no later than 120 days after the filing. Failure to settle the filing and administrative fees will lead to a case dismissal.
- The official bankruptcy form can only be completed if the debtor provides complete information on the list of creditors including the amount and nature of the claim. The source, amount, as well as the frequency of the expected income of the debtor must also be included. All properties of the debtor must also be listed together with a detailed account of monthly living expenses. For spouses, the information must be filed in view of conjugal property, income and liabilities. This is without prejudice as to whether the petition is done under a joint or individual claim for Chapter 13 Bankruptcy. It also does not matter if only one of the spouses is filing for the petition. An accurate account of the financial position of the household is required by the court when only one of the spouses is filing the petition for bankruptcy.
- An impartial trustee will be appointed once an individual files a petition for Chapter 13 Bankruptcy. In some cases, a standing trustee may be appointed by the bankruptcy administrator to oversee all Chapter 13 Bankruptcy petition filings. This trustee is responsible for evaluating all the cases, as well as serving as the disbursing agent including the collection of payments from the debtor and subsequent pay off to the creditors.
- Once a petition for Chapter 13 Bankruptcy has been filed, almost all collections against the debtor including his property are automatically stopped. This means that creditors cannot begin or continue with any pending lawsuits arising from financial obligations of the debtor. Telephone calls demanding for payments either from the creditor or its collecting agencies will not be tolerated and strictly prohibited. This is due to the fact that the stay on the collection arises from the implementation of the law which does not require judicial intervention. The bankruptcy clerk is the one responsible for informing and giving due notice to all creditors about the petition of the debtor. The dissemination of information to the creditors will be based on the list provided by the debtor. This means that the clerk of court will not be held liable for failing to inform any creditors not included in the list submitted by the debtor.
- There is an automatic provision included in the Chapter 13 Bankruptcy law that protects any co-debtor from being subjected to collection notices from creditors. Without the proper consent of the bankruptcy court, no creditor can seek the collection of consumer debt from any and all individuals deemed liable for any financial obligation entered into with the debtor. Those which fall under the category of consumer debt are financial obligations that are incurred based on personal, family, or household monetary needs.
Chapter 13 Bankruptcy is intended to help protect and save the homes of debtors from foreclosure. It protects the majority of the properties of the debtor while giving him a way to pay off his financial obligations in a more reasonable period with relatively lower interest charges. If you feel that you will be unable to meet your debts, this is perhaps one of the more reasonable ways for you to settle them and help you get back on your feet.