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Chapter 13 bankruptcy is for individuals in the United States who would like to undergo a financial reconstruction supervised by a federal bankruptcy court. This chapter allows income receiving debtors a debtor rehabilitation, provided they fulfill a court-approved plan. Chapter 7 governs the process of liquidation under the bankruptcy laws of the United States. A Chapter 7 filing means that the business intends to sell all its assets, distribute the proceeds to its creditors and cease all operations. If the debtor lacks sufficient disposable income, then it is viable to fund a Chapter 13 plan.In a Chapter 13 reconstruction, the debtor proposes to pay his creditors over a 3-5 year period. Under Chapter 7 filing, creditors with secured loans are given first preference over the debtor?s assets. Under Chapter 13, the debtor?s creditors cannot attempt to collect on the individual?s previous incurred debt during the rehabilitation period except through the bankruptcy court.In this case, they end up with less money than they are owed.In a Chapter 7 case availability of future credit is difficuilt to ascertain and, in some cases, not possible.However, in a Chapter 13 case, credit can be permitted upon obtaining the Chapter 13 trustee?s permission. In both the chapters the disadvantage of filing for bankruptcy is that a record of it stays on the individual?s credit report for 10 years. The advantage of filing under Chapter 13 is the abiity to stop foreclosures and to have accelerated mortgages reinstated upon the completion of the bankruptcy plan. The advantage of filing underChapter 7 is that the debtor is allowed certain exemptions like child support, retirement income, etc.
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Chapter 7 provides detailed information on Chapter 7, Chapter 13 Bankruptcy, Chapter 13 Trustee, Filing Chapter 13 and more. Chapter 7 is affiliated with Chapter 7 Bankruptcy Forms.
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