What are the different types of repayment plans of Chapter 13?
In the United States, individuals can qualify for one of two types of personal bankruptcy: Chapter 7 Liquidation or Chapter 13 of repayment. In bankruptcy in Chapter 7, a court official known as the bankruptcy administrator, he destroys the remaining assets of the debtor and uses revenues to repay some of his debts and then release the balance. In the Plan of Chapter 13, the debtor must repay all or part of his debts for three to five years. The debtor and its lawyer develop a repayment plan that corresponds to the federal instructions and is approved and under the supervision of the administrator. The debts are repaid according to the priority and any balance remaining at the end of five years is repaid.
Chapter 13 Bankruptcy is a possibility for two groups of people. The first are those who exceed the federal means of test, which determines whether the person has sufficient income to pay off his debts over time. The second group of debtors are those who want to maintain their assets, such as healing or other valuable assets. Plan of Chapter 13It begins to maintain its home and valuables and at the same time fulfill the duties of the structured repayment plan.
The disadvantage of repaying Chapter 13 is that the repayment period is up to five years, and all one -off income of the debtor, outside of court expenses, applies to the repayment of the debt. During the repayment period, the debtor's income is not his own and his personal finances are subject to the approval of the court. If his personal circumstances turn to the worse, he may have to negotiate new bankruptcy conditions to avoid the rejection of the repayment plan of Chapter 13 and back where he started.
debts are repaid in the order of priority, with duties such as children's support, maintenance and back taxes that take priority. The next in line for payment is secure debts such as mortgages, and finally unsecured debt, such as credit cards and medical accounts. Some debts cannot be released in bankruptcy such as child support, most student soilJček and judgments from court disputes over the influence of alcohol. While payments for these debts are made during the repayment period, they will not be released at the end of the bankruptcy. Finally, bankruptcy cannot be fully released at the end of the five -year repayment period until the debtor complements the education and money management course.