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Flexibility - A Good Reason to File Chapter 13 Bankruptcy

February 06, 2012 | Comments: 0 | Views: 143

Nowadays, since the downturn of the economy many people are facing bankruptcy. Typically, when someone thinks of filing bankruptcy they think of Chapter 7 but usually never Chapter 13. It's not that it's a bad chapter, it's just kind of the ugly stepsister of Chapter 7 bankruptcy. The reason for this is the repayment plan that's required.

A Chapter 13 bankruptcy plan requires the debtor and their bankruptcy lawyer to submit to the bankruptcy court a repayment plan that will last 3 to 5 years. While most people filing for bankruptcy feel they shouldn't have to repay anything, there are its benefits. One of the most outstanding benefits of Chapter 13 is that the power is put in the hands of the debtor on to whether or not they want to keep property. Just like Chapter 7 bankruptcy, Chapter 13 shares the automatic stay that is put in place at the time of the bankruptcy filing. In the case of a Chapter 13, is the power to stop foreclosure. Most people end up filing bankruptcy under this chapter because they are trying to protect their family home from foreclosure.

One of the best and lesser-known benefits of a Chapter 13 bankruptcy is the flexibility. Many people ask their bankruptcy lawyer what would happen if in the middle of the payment plan they were unable to continue on. The answer to that is simple, the bankruptcy lawyer would modify the plan to accommodate the debtor. The bankruptcy court understands that five years is a long time when it comes to an individual's financial life.

Things change, a job, a divorce, a medical illness and many other things can happen that will make the debtor unable to make the payments. The beauty is, all the debtor has to do is call their bankruptcy lawyer and ask to have their plan modified for the amount of time that they believe it will take them to get back on track. In some cases, the damage is permanent and the modification will have to be through the end of the Chapter 13 plan. If it is something like a job loss that will prevent the debtor from continuing making the payments at all, the debtor can file a motion to change over to a Chapter 7 bankruptcy. At this point, the debtor will have to qualify to file Chapter 7 bankruptcy and begin the process all over.

The great news is, with Chapter 7 all unsecured debts are completely wiped out and there is no repayment plan to worry about. The downside is the debtor might have to surrender any secured property they can no longer afford to make the payments on. This flexibility allows the debtor to be accommodated to do the best they can to complete the Chapter 13 plan and get their bankruptcy discharge. The bankruptcy court does everything it can to ensure the debtor is successful and get their fresh start that a bankruptcy filing promises.

The author is a professional that formed FilingBankruptcyNow.Com which provides information for debtors considering filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy and helps individuals stop foreclosure and eliminate their debt by putting them in touch with a local bankruptcy attorney.

Source: EzineArticles
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