Bankruptcy in any form is a process whereby a person or business entity can reorganize or eliminate their debt under the auspices and protection of the court. Chapter 7 is the common approach when the focus is on debt discharge; Chapter 13 is the approach those who have significant assets that they want protect take. Chapter 13 demands that the debtor, usually in cooperation with a Chapter 13 bankruptcy lawyer in Chicago, develop a plan for repayment of the debt over a court approved period of time, rarely exceeding five years, more often three or four years is agreed upon. Once the repayment and reorganization has been completed to the liking of the court all remaining debts are discharged and the debtor is free of his or her obligation under the law. Chapter 13 is not for everyone and it is advised that discussions with a lawyer take place before the decision is made.
Chapter 13 can be considered worse for a person’s credit than chapter 7 because the bankruptcy period is considerably longer, however, there are valid reasons for electing chapter 13 over chapter 7 bankruptcy.
* The main reasons to choose chapter 13 are:
* To protect your home from foreclosure
* To protect non-exempt assets
* Filed Chapter 7 in the preceding eight years
* Tax liabilities
* Avoid the repossession of a vehicle
* Student loans and back child support
If a petitioner has a decent job and the exempt and non-exempt debts to not exceed the legally imposed limit then Chapter 13 is a viable option as it will allow for the reorganization of the debts, eliminating through payment those which are non-dischargeable, thus the bankrupt protects his or her valuable assets.
Filing for Chapter 7 bankruptcy is quite straight forward, the amount of debt and the creditors detail is given to the court, the court decides which debts must be paid and which are immediately discharged. Chapter 13 is somewhat more complicated. As the debtor, you and your Chapter 13 bankruptcy lawyer in Chicago meet with the court, immediately upon declaration of intent an automatic stay is put into effect. Within the next 30 days the debtor and the lawyer develop a plan for reorganization of the debtor’s affairs and repayment of the current non-exempt debt. Once the court accepts the plan a court appointed administrator takes control of the debtor’s income, paying off the various creditors over the agreed upon time frame. At the end of the period the bankrupt is discharged. Visit Law Offices of David P. Leibowitz LLC for more.
