The main intention of filing bankruptcy under Chapter 13, is to repay the debts standing in their name and at lower or no interest. This Chapter is different from Chapter 7 in that it involves liquidation of assets and allows the debtor to pay off the creditors from their future business profits. It can thus be seen that Chapter 13 bankruptcy is beneficial for a debtor with regular source of income and request for such adjustment facilities.
The maximum period allowed to a debtor under the United States Bankruptcy Code is 5 years within which he has to repay the creditors. Though the debtor is under the protection of the Attorney, the gamut of operations is supervised by the courts.
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How Does Chapter 13 Bankruptcy Work?
Allowing the debtors to retain their property, the court extends certain financial relief to them. A detailed schedule of possible transactions with their duration is created by drawing a plan. The period of payment commences between 30 and 45 days after the beginning of the case.
The elimination of temporary payment to a creditor through the trustee, as in Chapter 7 is avoided in Chapter 13 Bankruptcy. The temporary phase of payment to the creditor through a trustee, as in Chapter 7 Bankruptcy is eliminated in Chapter 13 Bankruptcy. Strict adherence of repayment plan as scheduled by the Court is followed and under any circumstances, the creditors are banned from resorting to collection of claims from the debtor.
Full discharge option which is not allowed under Chapter 7 filing is agreeable under Chapter 13 which is a plus point. In the event of fulfillment of repayment plans as scheduled, he/she will reap the full benefit. Yet another piece de resistance under Chapter 13 is repayment is possible, despite the disagreement of the creditors, subject to the approval of the court.
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