Bankruptcy Advice, chapter 13
bankruptcy is preferred by debtors who have a valuable asset,
such as a property or home, that is not completely covered by
exemptions and that they wish to keep. This is possible because
under Chapter 13 bankruptcy a debtor proposes a plan to pay
creditors over a three to five year period during which the debtor
can make up overdue payments on any assets and pay into the plan the
equivalent value of any assets not covered by exemptions. Since
the debtors plan will require regular monthly or biweekly payments,
Chapter 13 bankruptcy is usually only appropriate for an
individual debtor who has a regular income.
Bankruptcy
Advice
At a confirmation hearing, the court either
approves or disapproves the plan, depending on whether the plan
meets the Bankruptcy Code's of requirements for
confirmation.
Chapter 13 bankruptcy is very
different from chapter 7 bankruptcy since the chapter 13
debtor usually remains in possession of the property of the estate
and makes payments to creditors, through the trustee, based on the
debtors anticipated income over the life of the plan.
Unlike chapter 7 bankruptcy the debtor does not receive an
immediate discharge of debts.
The debtor must complete the
payments required under the plan before the discharge is
received.
The debtor is protected from lawsuits,
garnishments, and other creditor action while the plan is in effect.
The discharge is also considerably broader (i.e., more debts are
eliminated) under chapter 13 bankruptcy than the discharge under
chapter 7 bankruptcy.
