Chapter 13 Bankruptcy means to file for bankruptcy under chapter 13. The debtor files for chapter 13 and along with this, a repayment plan has also to be submitted. A plan called as wage earner plan is set by the lawyer and it is approved by the judge. The plan consist of the monthly deductions which is passed by the judge for paying to the creditors. This plan will suggest that you can pay your mandatory debts over the three or five year repayment period. Once the wage earner plan gets completed, lasting between 3 to 5 years, a discharge is granted by the judge. If the debtor fails to pay between 3 to 5 years, then he will be fined for 10 years. It is important to know that within 6 months of completion of the wage plan, the judge will come to a decision whether the debtor has to be given a discharge ( to be released from his debts) or not. The judge will decide on the basis of the debtor's status with regard to the completion of the wage earner plan.
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Chapter 13 bankruptcy is also called as reorganization bankruptcy. Before you file for bankruptcy, you must seek for advice from a credit counselor or from an approved agency. In my opinion, chapter 13 bankruptcy is not meant for everyone. When you file for chapter 13 bankruptcy, you must be aware of the fact that you will have to agree in the court with proof that you can repay all or a portion of your debts over a time period. According to chapter 13 bankruptcy, you are allowed to keep your property with you but you will have to use your income for repayment of your debts. Hence, to file a chapter 13 bankruptcy, you must have a stable income so that your deductions will be done.
Filing a chapter 13 bankruptcy includes filling of forms whereby you have to disclose your property and debts etc. Filing a chapter 13 bankruptcy is meant for those who can pay off certain debts over a period of time and who have enough income standing in order to be eligible for filing chapter 13 bankruptcy. In chapter 13 repayment plan, you will have to show how you propose to pay your mandatory debts relating to your child support, tax arrears etc and also details about being able to pay your other debts over a period of time. When you submit your repayment plan in the court, you must have valid proof to do so. You must also have valid proof showing that you can pay your mandatory debts and perhaps repay all or a portion of other debts, over the three or five year repayment period.
Most of the courts prefer the debtors to file chapter 13 bankruptcy code over other bankruptcy laws. Once the court approves the chapter 13 plan, the creditors can take no action outside the plan's scope to collect their debts. Once chapter 13 plan is fulfilled and completed, the debtor gets a discharged by the court. To be discharged means the debtor is released from his debts. A discharge is granted by the judge once the debtor completes the wage earner plan consist of proposed schedule monthly deductions that is approved by the court and it is this monthly deducted amount will finally go towards paying the creditors.
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