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FILING FOR CHAPTER 13
BANKRUPTCY
Also referred to as “reorganization bankruptcy,” Chapter 13
involves the filer’s income as the main source of repayment
of debts owed to creditors. The duration allowed to the
filer usually is between 3 and 5 years depending on the
amount of both the debt and income. If a person does not
qualify for Chapter 7 bankruptcy, they usually look towards
other alternatives before filing Chapter 13 bankruptcy.
If Chapter 13 bankruptcy proves to be the best route for the
individual but their income level is too low, the courts may
not allow the filing to take place. Furthermore, if the
overall unsecured debt amount is too high (over one million
USD) the individual may not be eligible. These are a few
reasons why a bankruptcy alternative plan may be best for
the individual involved.
The most important part of Chapter 13 is the overall
structuring of the repayment plan. This plan serves to
describe in detail how the individual is to pay off their
debts and even more importantly, how much of the debt is to
be repaid. The courts are solely responsible for the outline
of this repayment plan.
Within a Chapter 13 repayment plan are debts commonly
referred to as “priority debts.” These are debts that are
more important than other debts within the bankruptcy
obligation and are to be paid back in full. Common priority
debts include child support, alimony, employee wages, and
debts owed to the IRS.
In addition to priority debts, there are also other
arrearages. An arrearage is the amount of money one has
fallen behind in payments to creditors. Secured debts such
as mortgages, cars, and boats are also to be outlined in
this repayment plan.
Relian Debt Relief can help you with making your decision on
whether bankruptcy is the right path for you. Contact us
using the form above and we'll get back with you on a
specific plan suited to your needs.
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