Only a few years ago, Congress made many major changes in bankruptcy laws that affect how the bankruptcy was filed, and even who is eligible. For example, you can not file for bankruptcy just because you’re tired of paying the bills, but the new law, there is a defined set of procedures to follow for each chapter is presented, and your financial situation will be evaluated under a microscope, should also be approved first.
But one of the areas that have remained almost untouched by the wide range of changes was Chapter 13 bankruptcy. This chapter was originally built a house to prevent the placing on the category of exclusion. But with the huge number of seizures that occur in the United States today, it is unfortunate that many people still do not know that the chapter 13 bankruptcy filing may also be used to prevent foreclosure on their house.
For the average consumer, there are three different types or chapters of bankruptcy available, depending on their particular circumstances. The first is Chapter 7 bankruptcy, which is the most common type and is also sometimes referred to as liquidation. Obviously the reason is known as liquidation because most of the debt discharged, to allow the Court appointed trustee for the liquidation of all assets not exempt. Even with this chapter, however, be aware that there are some types of loans can be discharged from bankruptcy.
Although used in a manner more appropriate to be used by either businesses or individuals with assets and income, another type of bankruptcy available to consumers is Chapter 11, often known as a corporate restructuring. This guy should not eliminate the debt, but it gives the person or firm to reorganize the structure of its debt and to review the payments to creditors, sometimes for a period of time longer, but sometimes at a reduced rate. Creditors are usually willing to do this, since collecting their money over the years and the interest is definitely better in their eyes that have the debt means completely inappropriate in another chapter.
The last element or chapter of bankruptcy available to consumers are Chapter 13, often known as the reorganization of the employee. This type is less expensive to file, and is typically used by consumers, who still retain their ability to make his payments, usually within three to five years. The total value of their assets, which are classified as non-exempt basis and used as a guideline for the amount to be paid at this time and taking into account the level of income and any debts that can not be dismissed.
But what many consumers do not realize is that the chapter 13 bankruptcy also allows owners to halt the foreclosure if they are behind on their mortgage payments. While the same can be said for the other items of consumer bankruptcy, Chapter 13 is designed to allow consumers to pay the delinquency in equal monthly payments for a period of 60 months (5 years). The mortgage lender has no choice but to accept this, if all other conditions and qualifications of this chapter.
The process to be qualified to file this chapter are more stringent than the others, because it requires a thorough examination of total debt and total income. Any chapter of bankruptcy is now considered a “do-it-yourself” procedure with all new legal requirements, and regardless of which chapter you are thinking, you are strongly advised to consult a qualified bankruptcy lawyer and ensure that both you and your property, combined with the specific situation, you actually qualify.
The biggest benefit that you get to Chapter 13 bankruptcy if you happen if you are facing the foreclosure process is that it buys time. That time may be used for your current financial situation better, or can be used to find the right buyer for your property. If you proceed with this, keep in mind that the time allotted to it is finished, and should begin to plan and act now.
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