New Chapter 13 Bankruptcy Filing Requirements
Debtors who file Chapter 13 bankruptcy are given greater options by
the Code when dealing with past due payments. A Chapter 13 bankruptcy
plan is similar to Chapter 11, because debts may be restructured
according to the debtor's ability to pay. Interest paid by a plan is
reduced to a special Chapter 13 refinance rate, past due payments
included in the plan are considered current, and in some cases,
principal owed may be reduced.
At the end of the plan, the remaining balance owed on most debts is
discharged similar to Chapter 7. In the most basic light, bankruptcy
Chapter 13 then is a combination of benefits available under both
Chapter 7 and Chapter 11, and requires partial payment of debts over a
period of 3 to 5 years. Also be aware that bankruptcy Chapter 13 laws
and Chapter 13 rules changed recently.
Plans require all disposable income to be paid to a trustee, who in
turn, disburses payments to creditors. In Chapter 13 bankruptcy, the
disposable income test is based upon National Averages Allowances
derived by regional cost of living standards. Additionally, many debtors
are entitled to adjust these standards based upon several unique
factors. Other recent changes affect Chapter 13 credit cards and Chapter
13 loans, including mortgages, cash advances, past due fees, principal
arrearages, and other debts in arrears.
For more information, see also:
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