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There are multiple types or chapters of bankruptcy. Chapter 13 bankruptcy is frequently also known as reorganizational bankruptcy and also as a wage earner's plan. It can be used by individuals as well as unincorporated businesses. This allows the filer to structure a repayment plan for their financial obligations which is supervised and approved by the bankruptcy court. Under this plan, you are given a period of time, typically three to five years, to get your debt repaid. After you have filed, your existing creditors cannot call or harass you, and are not permitted to start collections proceedings against you. This type differs quite a bit from chapter 7 bankruptcy. With Chapter 7, your debt is almost completely wiped out. However, you must relinquish your assets in order to repay the debt. But with chapter 13, your debt remains, it is just reorganized and you are able to maintain possession of your assets. Bankruptcy is not a debt consolidation loan, although some people may view it in that way. With Chapter 13, your financial obligations remain and you are not given any type of loan to pay them off. A repayment plan is defined and the funds are distributed to your creditors by a trustee which is appointed by the court. You no longer have any type of contract with your creditors, but that fact does not negate the fact that you still have financial obligations with each creditor. Certain types of debts are prioritized and are paid first. If the liquidation of your assets is a concern, like having the mortgage company foreclose on your house, this type of bankruptcy may be perfect. Once Chapter 13 proceedings commence, any current or pending foreclosure procedure is stopped. If you have delinquent mortgage payments, those must be brought up to date and you must continue with your mortgage payments, but your home will not be foreclosed on. Another advantage of chapter 13 bankruptcy is that secured debt can be rescheduled. By doing this, an individual may actually lower their overall payments, making it easier to repay their debt. Chapter 13 bankruptcies can be used for an individual or an unincorporated business or self employed person can file chapter 13 bankruptcy, with limitations. The total amount of unsecured debt must be less than about $307,000 and the total amount of secured debt must be less than about $923,000. These limitations are periodically adjusted according to the consumer price index. Before you are eligible to file bankruptcy, you must first go through credit counseling. The credit counseling must be through an agency that is approved by the United States Trustee's office. Although the companies may charge a fee for their services, if you are unable to pay their fee, they must reduce the cost and make adjustments for your individual situation. If you need some financial breathing room that does not require liquidation of your assets, Chapter 13 bankruptcy may be what you are looking for. A workable repayment plan is arranged so that you can repay your debts. Although bankruptcy is not something you want to do, it might be the answer if you find yourself with an overwhelming loan of debt that you cannot see over the top of.
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