Chapter 13 bankruptcy only requires that the debtor has to repay some, not all, of his/her debts. After all, if the debtor could afford the full repayment they generally would not be filing bankruptcy anyway, right?  The Chapter 13 petition is practically the same as the Chapter 7 except that it is a debt adjustment for those with a standard income.

To qualify, the debtor’s unsecured debt cannot exceed $269,250 and the debtor’s secured debts must be smaller than the amount of $807,750 and the plan is set for between 3-5 years. Also, the trustee’s job is easier since he/she must only collect the payments and disburse them to the creditors. The debtors negative accounts are discharged (the court releases a written statement to debtor stating that his/her debts have been fulfilled) and he/she can begin rebuilding their credit.

To sum it up, the pros seem clear. However, as with anything there are cons and the debtor has to correctly evaluate his/her position and choose what’s best for them. As for credit, sure bankruptcy has a negative effect but in today’s society car dealers offer loans and assistance to those with bankruptcies. Not to mention secured credit cards! The road to financial recovery is a very attainable goal after bankruptcy and should not be regarded as financial death but a new and reformed financial security!

To begin the process the debtor has to go to court and file a petition, which is a formal written request. This request includes, the details of your finances (assets, income and debts) along with the list of assets being claimed as exempt from liquidation (assets such as automotive equity, disability payments and basic furniture and/or furnishings).

A court appointed trustee (a legal person who commits to the administering of the property within the filing) is assigned to the filing.  The trustee’s job is to review your filing, orchestrate the meeting with your creditors, review your eligibility for discharge, sell the assets proven to be non-exempt and finally to get the proceeds of the sale to the creditors.

The court procedures can take between 3 to 4 months and means that only certain assets can be claimed as exempt excluding real estate.