You must have watched or heard much about Chapter 13 Bankruptcy. This is because different media portals such as television, online and radio programs often discuss the different types of bankruptcy in line with the most recent financial crisis.

However, most consumers today find the information presented in different media portals somewhat confusing. The reason for this is that the ideas and concepts that various presenters discuss about Chapter 13 Bankruptcy often contradict each other. Thus many individuals find it hard to identify the right ideas and concepts that they should believe in.

Now, in order to assist our readers find the actual facts about Chapter 13 Bankruptcy, we have provided a short discussion on the basics of this type of bankruptcy.

Basic Information on Chapter 13 Bankruptcy

1. Chapter 13 Bankruptcy is also known as wage earner's bankruptcy. Why? It is because one of the main requirements in filing this type of bankruptcy is a stable source of income. A stream of earnings is important since this will ensure that the consumer will be able to keep up with his monthly charges to gradually settle his existing credit obligations

2. Chapter 1 Bankruptcy is also known as Reorganization Bankruptcy. The reason for this is that filers for this type of bankruptcy will be allowed to restructure their debts. Through this arrangement, a consumer will be allowed to use his future income to guarantee the repayment of his outstanding credit balances under the supervision of the bankruptcy courts.

3. Chapter 13 Bankruptcy requires filers to propose debt repayment plans. A filer for Chapter 13 Bankruptcy must come up with a credit repayment plan. Such plan provides information on how the consumer intends to pay off his credit accounts within three to five years. The plan will also feature relatively lower rates of interest to allow the bankruptcy filer to completely retire his credit obligations within the agreed upon period of time.

4. The repayment amount in Chapter 13 Bankruptcy will depend on three major factors. First, it will depend on the monthly earnings of the bankruptcy filer. The consumer must come up with a debt repayment plan in lieu of his monthly income. This way he can pledge a realistic amount that he can afford to pay each month. Second, the total money owed. It is also important to consider the total amount owed by the filer as this will determine the value of his monthly installments, as well as the length of time it will take him to completely pay off his credit charges. And third, a consideration of the unsecured credit accounts that the consumer has incurred. This needs to be carefully considered so that the consumer can meet the requirements of his unsecured credit account providers.

Who Files for Chapter 13 Bankruptcy?

Now let us identify which consumers often file for Chapter 1 Bankruptcy. Actually most filers for this type of bankruptcy are those individuals who do not wish to lose their assets to liquidation. These borrowers would rather pay their debts completely rather than have their valuable possessions taken and sold to pay for their credit balances. So they enter agreements to settle their credit charges under a more relaxed repayment program.

The New Bankruptcy Law also gives important provisions regarding the individuals who are eligible to file for Chapter 13 Bankruptcy. According to the Bankruptcy Act of 2005, consumers who have incurred not more than $1,010,650 in secured debts and $336,900 in unsecured debts are qualified to file for reorganization bankruptcy.

We hope that this short overview helped you see the actual facts that you need to know about Chapter 13 Bankruptcy.