Chapter 7 and Chapter 13 bankruptcy are Common

When people decide they need to file for bankruptcy, they need to decide which chapter to file. Filing Chapter 13 bankruptcy is a legal means of resolving personal indebtedness, preferably when other avenues have been exhausted. Debtors who file petitions have reached a point where monies owed far exceed income or an ability to repay. Some face losing homes, businesses, and prized material possessions that have taken a lifetime to accumulate. Fortunately, for individuals and businesses that face home foreclosures and repossessions, or go out of business due to a lack of income, the U.S. Bankruptcy court system offers opportunities to legally file financial insolvency. Bankruptcy Filings come under Chapter 7, 11, and 13 of the federal law, with the latter being the petition chosen most by debtors who are gainfully employed or have a source of steady income. A Chapter 13 bankruptcy filing, also called a wage earner petition, requires employed individuals to establish a court-ordered debt management plan under which creditors are paid within a three to five year period. Chapter 13 bankruptcy has been called the term “wage earner,” but not many debtors are familiar with the process of filing for bankruptcy under this chapter. A court-appointed U.S. trustee or administrator oversees and distributes the debtor’s disposable income to settle secured and unsecured creditor claims. Secured claims are those filed by lien holders of property which can be used as collateral, such as homes, cars, equipment, or inventory. In a Chapter 13 usually all property can be kept, unlike a Chapter 7 where the individual or debtor might have to surrender property to sell to the bankruptcy trustee.

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