What is Chapter 13 Bankruptcy? It is a plan for wage earner!

by Dori Tery on June 19, 2013

What is Chapter 13 Bankruptcy?

To file for Chapter 13 bankruptcy, you must have a regular income, secured debts of less than $1,010,650 and unsecured debts of less than $336,900 (these are 2007 figures and are adjusted each year for inflation). Under Chapter 13, you design a plan that will allow you to replay the majority of your debts, whereas under Chapter 7 bankruptcy, most of your debts are discharged. The repayment schedule under Chapter 13 is designed so that you can continue to cover normal expenses while still meeting the repayment obligation. You maintain title and possession of your assets and, other than the new debt repayment schedule, continue on with life as before. For your creditors, it means a controlled repayment of debt obligations with court’s supervision. For individual, it may mean relief from the harassment of bill collectors and the pressure of never knowing how future obligations will be met.

Bankruptcy happens to all kinds of good people, and it can provide breathing room to start over when there is no hoe. Burt Renolds, Hollywood’s number 1 box office draw from 1978 through 1982, along with Kim Basinger, Toni Braxton, and Antonio Tarver (the WBC light heavyweight boxing champ) have all filed for bankruptcy.

Although Burt Reynolds made a ton of money in movies such as Smokey and the Bandit and Cannonball Run, he also lost around $15 million in Pro-Folks restaurants. When he finally filed for bankruptcy he had $11.2 million in debts and assets worth only $6.65 million. Because he exceed the debt limits of Chapter 13 bankruptcy, he was forced to file under Chapter 11. Among his debts were a loan from CBS of $3.7 million plus interest and $121,979 to his custom wig-maker. Chapter 11 gave him the breathing room to begin again and regain control of his finances.

Do you know many people file Chapter 13 bankruptcy due to medical?

Bankruptcies went up dramatically in the last century. Before then people did not live as long, and when they did get, they died – in effect, death kept them out of financial trouble. Today, medicine can do wonders, but it can also put you in a financial predicament that is hard to recover from.

In Summary – What is Chapter 13 Bankruptcy?

what is chapter 13 bankruptcyWho can file – If you make more than the median income in your state, have more than $100 a month of disposable income, or have enough disposable income to replay at least 25 percent of your debt over 5 years.

Repayment requirements – You design a repayment schedule in such a way that you can continue to cover normal expenses while still meeting the schedule. Assets are not liquidated m and disposable income after living expenses is used to pay off debt over 3- to 5- year period.

Long term Effect on Your Credit File – Bankruptcy information remains in your credit file for 7 years form the end of repayment

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