What is Chapter 13 Plan? (Chapter 13 Bankruptcy)

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The Means Test is a calculation applied to almost every consumer Chapter 7 bankruptcy case and is purportedly designed to determine whether the debtor has enough disposable income to fund a meaningful Chapter 13 plan. If so, the debtor is said to be filing the Chapter 7 case under a “presumption of abuse,” that is, the bankruptcy laws would rather have that debtor making payments for a period of time and paying back at least a portion of debt, rather than get an outright discharge of the debt. Although it is possible to overcome the “presumption of abuse” by showing special circumstances, most debtors who “fail” the Means Test choose to file a Chapter 13 case rather than suffer through the scrutiny necessary to overcome the presumption.

There are many reasons why a debtor would choose to file a Chapter 13 despite the Means Test.

What a Chapter 13 Can Do that a Chapter 7 Cannot Do:

• Chapter 13 may provide a debtor with bankruptcy protection even if he makes too much money to qualify for a Chapter 7 case or if he received a discharge in a prior Chapter 7 case.
• Chapter 13 allows a debtor the length of the plan to pay back past due amounts owed on houses, cars and other loans that have collateral.
• Chapter 13 allows a debtor to pay past due income taxes and domestic support obligations like child support and alimony over the three to five year Chapter 13 payment plan.
• Chapter 13 may allow a debtor to set new terms for the payment of a car loan that is older than 2.5 years.
• Chapter 13 protects the debtor’s co-signer on a personal loan from having to pay.
• Chapter 13 may allow the debtor to better manage high student loan payments.
• Chapter 13 allows the debtor to protect property that he might have to give up in a Chapter 7 case.
• Chapter 13 may allow the debtor to pay his bankruptcy attorney’s fee as a part of the Chapter 13 plan payment instead of all up front.

The Chapter 13 Payment Plan:

The hallmark of a Chapter 13 case is its payment plan. The payments last from 36 to 60 months and may include an amount that will go to unsecured creditors, past due taxes, child support, and past due home mortgage amounts. It may even include car or house payments and some portion of a debtor’s attorneys fees. It is designed to:

• Help make payment of unsecured debts like medical bills and credit cards more affordable and manageable.
• Provide a way to pay past due house, car, income tax, child support and alimony payments over time.
• Substitute for the need to sell or turn over nonexempt property.

The amount of the payment is determined by the amount and types of debt owed, the debtor’s income and the debtor’s reasonable and necessary expenses.

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Are Secured Debts Discharged in Chapter 13, What is Chapter 13 Plan? (Chapter 13 Bankruptcy).

Your Fast Guide To Financial Obligation Freedom

At the same time it will make your month-to-month payment smaller. Addressing this really depends upon each private circumstance. Financial obligation issues are really common, therefore are insolvencies.

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You can also make double payments to reduce the repayment quantity. It really depends on how we manage the debt. Some might think about a “quick-fix” in the form of combination.

There are two types of debt the protected and unsecured loan. The secured loan are the for which you have to supply collateral to the bank. The financial institution can settle the impressive financial obligation by selling your security. The unsecured loan is the financial obligation in which financial institutions do not take the interest but any security rate charged is really high. The unsecured debts can be removed easily due to lack of authority for the financial institution to recover their money. This brings the negotiation part. Then lender can not do much legally to recover their money, if you are not prepared to pay the whole amount. If you file for bankruptcy lender still have alternative to auction your security and recuperate their cost, in protected financial obligation. This part is missing in the unsecured financial obligation.

UnSecured Debt is financial obligation that is not Secured Debt-it isn’t connected to any particular properties. Just due to the fact that a debt is “unsecured” does not imply that you can not be sued for the debt. On the contrary, it suggests you need to be taken legal action against in individual for the financial obligation collector to collect any cash. The creditor then “enforces” the judgment versus you by garnishing incomes or attaching accounts. But this can be hard for different reasons.

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An excellent credit history isn’t practically debt, but how well you manage it. Good credit is also constructed when different kinds of financial obligation are reported. House home loans or automobile loans will help improve a credit rating as long as they are handled well. Credit cards reveal a different type of financial obligation, Revolving Debt. The regular monthly payment quantity differs with usage. Handling charge card debt is a magnificent way to improve your credit history. Improving a rating will spend some time. You will require to keep negatives out of your budget in order to see it go upward and onward.

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Every monetary instrument includes a dual edged sword. In a mortgage, your house is thought about security towards the debt. That’s the trick to ending up being financial obligation complimentary.

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