After the recession and liquidity crunch of 2007, due to high price rise many people are facing hardship in making payments toward credit bills or mortgage. As a result they cannot keep up with their monthly debt payments. To save themselves from this financial crisis many are opting for Chapter 13 bankruptcy. Prior to filing for bankruptcy a person should consult a Chapter 13 attorney. Louisville, KY is a place where many attorneys offer their services.
In Chapter 13, the court prepares a repayment plan that doesn't attract any interest rate. A written plan is worked out that has details of the entire plan. It includes details of transactions that are likely to take place and tenure of the entire program. A person should start making repayments as per the new repayment within 30 to 45 days from the date the case commenced. In case of Chapter 13, the same procedure doesn't exist. The creditors are required to support the repayment plan and while the consumer is making payments as per the new repayment plan, creditors are not allowed to make any claims from debtors.
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With the introduction of New Federal Bankruptcy Laws Chapter 13 bankruptcy has undergone few changes. Previously, a person had to keep aside the cash that was left after making payments for basic needs of the repayment plan. As per the new laws, a person is still required to hand over the disposable income. He has to calculate the disposable income by making use of "allowed" expenses as ordered by the IRS. This also holds true for those whose income is higher than the median income. After that the allowed expenses are to be subtracted from the person's average income. The income of the last 6 months prior to filing bankruptcy is also taken into account.
The main advantage of Chapter 13 bankruptcy is the "full discharge option", which is not applied in case of Chapter 7. There is another advantage of filing Chapter 13 bankruptcy. And that is it halts foreclosures. However, it should be kept in mind before filing for bankruptcy that it will remain in the credit report for a period of 7 years.
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