Bankruptcy Options - Chapter 13 Filing [mortgageinsuranceguide.blogspot.com]
Consumer finance agency says college students hurt by 'subprime-style' lending, urges bankruptcy option for debt. Published: Friday, July 20, 2012, 9:39 AM Updated: Friday, July 20, 2012, 9:53 AM. Bloomberg News By Bloomberg News The Star-Ledger ... Consumer finance agency says college students hurt by 'subprime-style' lending ...
The current global financial crisis caught many Americans unprepared for a downturn of the scale that has happened. As a consequence, many Americans found themselves in a situation where their financial liabilities far outpaced their ability to keep up without access to easy credit. The tightening of the credit markets in response to the current crisis inevitably led to a radical increase in the number of bankruptcies filed in the United States.
Many people considering filing for bankruptcy think of the more traditional Chapter 7 bankruptcy procedure first. This typically involves the wholesale liquidation of the petitioner's assets, although there are some items that are exempt. Most unsecured debts, like credit card debt and medical bills, are discharged and those debts that are not discharged tend to be rescheduled. Today, the United States Trustee who oversees Chapter 7 bankruptcies also imposes a strict means test, which may deny Chapter 7 relief to persons making enough money that the bankruptcy claim appears to be "abusive".
However, there is an alternative to Chapter 7 bankruptcy available, Chapter 13 bankruptcy.
Chapter 13 bankruptcy is also known as "reorganization" bankruptcy because it involves reorganizing the debtor's finances in such a way as to allow eventual repayment. The Chapter 13 option is useful for people that have nonexempt assets that they wish to keep (assets that would be liquidated under Chapter 7) or people that have a predictable income and can technically pay off their debt if it is adequately restructured. Importantly, Chapter 13 also extends special protection to third parties that may be liable for debts, such as a co-signer or spouse. Unlike a Chapter 7 liquidation that discharges debt within a few months, Chapter 13 filings lead to the creation of a Chapter 13 reorganization plan that remains in effect for three to five years.To be eligible for Chapter 13 filing, the debtor has to demonstrate that he will have a steady and reliable income over the period of the Chapter 13 plan. Further, once showing that this income will be available, required living expenses are subtracted from the predicted income. If there is enough money remaining to make significant headway in paying down the debt the filing will be allowed. Another restriction refuses Chapter 13 relief to people with more than $ 336,900 in unsecured debt and/or $ 1,010,650 in secured debt.
One rather peculiar restriction strictly forbids stockbrokers and commodity brokers from receiving Chapter 13 relief even if it is solely for their personal finances. Other than these basic restrictions, Chapter 13 relief is available to most people.
In general, the Chapter 13 filing process is complex and requires the assistance of a professional. Due to the nature of the process, most professionals will expect payment upfront before they take on a client. This means that if a debtor is considering a Chapter 13 filing, it is recommended that they do so before the situation becomes too desperate. Chapter 13 bankruptcy can be ideal for indebted professionals and others
Recommend Bankruptcy Options - Chapter 13 Filing Issues
