Some Important Aspects of Chapter 13 Bankruptcy Laws

Chapter 13 bankruptcy laws allow you to file for personal bankruptcy and use the bankruptcy courts as a mediating service between you and your creditors. The courts will arrange for an agreement between all parties that will re-organize your debts and help you pay them off in a more manageable way. While chapter 13 gives you several advantages and protections, it's important to know some of the things that will happen under this bankruptcy chapter. These are some of the most important points to know about what happens in chapter 13 bankrupcy law :

Late Payments
Most repayment agreements aim to give you the greatest possible flexibility so you can meet your obligations on time. Your payments will generally have a reasonable grace period that should keep your payments free from penalty. But if you do make late payments under the chapter 13 agreement, the trustee has the option to file a dismissal of your case. This means that your bankruptcy agreement has been defaulted and you are no longer protected under the measures of the agreement. Failure to make timely payments is the most common reason for chapter 13 dismissal, so take extra precautions to make sure your repayment plan is something you can reasonably manage within your current financial abilities before you sign the agreement.

Employer notification and discrimination

While employers are almost always notified of an employee's decision to file personal bankruptcy, federal bankruptcy courts prohibit discrimination against employees and job applicants who have filed for chapter 13. You will also be protected from discrimination when you apply for student loans, permits and licenses, and other types of public qualifications.

Chapter 13 duration
Currently, most chapter 13 bankruptcy agreements last between 3 and 5 years. However, some districts are planning to reach new agreement guidelines that can stretch chapter 13 bankruptcy out for even longer periods. The duration of your chapter 13 bankruptcy depends largely on the amount and type of debt you owe and how likely it is that you will be able to meet the obligations you agree to. While a shorter period means fewer years with the restrictive budget of chapter 13, it also means a tighter schedule you need to meet in making your repayment.

Payment plan and first payments
Once you have filed for chapter thirteen bankruptcy, you will be responsible for showing the court a proposal for your repayment plan, usually within 15 days. This plan should be worked out in the greatest detail possible and with help from a legal or financial professional if one if available to you. Once your plan is approved, you will generally have to make your first payment within 30 days.


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