Chapter 13 Bankruptcy

Individuals who file Chapter 13 bankruptcy undergo a reorganization of their debt which is supervised by the bankruptcy court. Under Chapter 13, the debtor and court come up with a plan that will attempt to pay back creditors within 3-5 years from the filing date of the Chapter 13 bankruptcy.

During this window of time, creditors are not allowed to contact debtors or do anything that may be considered as harassment to try and get the monies owed. In essence, individuals who file Chapter 13 bankruptcy are able to keep their property and they are still obligated to pay back their debt.

While the creditors in a chapter 13 bankruptcy do usually end up with less money, they prefer that their clients file a Chapter 13 bankruptcy over a Chapter 7 bankruptcy because under Chapter 7 bankruptcy the creditors may receive little if any of the money owed to them.

The drawback of filing a Chapter 13 bankruptcy is that is stays on your record for up to 10 years. During the pendency of a Chapter 13, the debtor is not allowed to apply and obtain credit without the consent of a court appointed trustee.

The advantages of filing a Chapter 13 bankruptcy is that you can stop any foreclosures that are occurring on your home and bill collectors are not permitted to contact you.

When you have a chapter 13 bankruptcy on your credit record creditors will probably be less likely to give you credit in the future. If you do obtain credit, you can expect the interest rates to be higher.

When you are turning over your information to the court for a Chapter 13 bankruptcy, it is important that you are brutally honest about your income and debt. This is the only way to ensure that the reorganization of your debt under chapter 13 is made to fit your personal needs.

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