Filing chapter 13 bankruptcy is a lengthy process. Each state has its own exemption limit. Chapter 13 bankruptcy begins with the filing of a chapter 13 bankruptcy form in the bankruptcy court serving the area where the debtor resides. A trustee proposes a 3-5 year plan to creditors where the debtor repays part of his debts out of future income. Chapter 13 bankruptcy law states that a plan lasts no longer than five years (chapter 13 bankruptcy law 11 U.S.C. § 1322(d)). To complete a chapter 13 bankruptcy form, the debtor needs to compile the following chapter 13 bankruptcy information: 1. A list of all creditors and their claims; 2. The source, amount, and frequency of the debtor's income; 3. Complete list of the debtor's property; and 4. A detailed list of the debtor's monthly living expenses, i.e., food, shelter, utilities, taxes, transportation, medicine, etc. This chapter 13 bankruptcy information allows the trustee to calculate your affordable monthly payments when considering your living expenses, income, and disposable income. You must live under a strict budget; the bankruptcy court will not allow you to spend money on anything it deems nonessential. The debtor's employer can withhold the payment from the debtor's paycheck and transmit it to the chapter 13 bankruptcy trustee.

The debtor is examined under oath at a meeting of creditors. This occurs both 20 and 50 days after filing a chapter 13 bankruptcy form. If the United States trustee or administrator designates a meeting place that is not staffed by the United States trustee or administrator, it may be held before 60 days after the order for relief, according to chapter 13 bankruptcy law. The debtor attends the meeting where creditors ask questions about the debtor's finances and proposed terms of the plan, as stated in chapter 13 bankruptcy law 11 U.S.C. § 343. Bankruptcy chapter 13 allows for car and mortgage payments in the chapter 13 bankruptcy plan. The creditor may be required to accept these payments instead of proceeding with foreclosure or repossession. You have to keep making your house payments and/or car payments throughout the 3-5 year chapter 13 bankruptcy period or you must foreclose or sell.

Bankruptcy chapter 13 may be the best bankruptcy option for the following situations: You have substantial secured debt that you want to retain and it cannot be discharged in Chapter 7 bankruptcy due to limited state exemptions; Someone co-signed a loan and would be responsible for it if you filed Chapter 7 bankruptcy; or you have an IRS obligation or student loan that can only be discharged in Chapter 13 bankruptcy.

In Chapter 13 bankruptcy you repay at least 50% of your debts. Bankruptcy chapter 13 does not stay on your credit as long as a Chapter 7. Chapter 13 bankruptcy could stay on your credit report for up to ten years from the day you file the chapter 13 bankruptcy form. Yet, rarely is a Chapter 13 bankruptcy reported for more than seven years. Issuers of credit consider your chapter 13 bankruptcy filing in deciding whether to extend credit. Some lenders may extend credit only after a number of years have passed, or only after the chapter 13 bankruptcy falls off your credit.

The problem with chapter 13 bankruptcy is that you may end up repaying 50% or more of the debt, in some states the entire amount, and be forced by the courts to make the payments. If you miss a payment you could end up in breach of court and be forced to repay the whole debt. You can stop collection efforts by filing chapter 13 bankruptcy but why tie yourself into making payments by the courts? Unfortunately, the majority of debtors never complete their Chapter 13 bankruptcy repayment plans. While most filing chapter 13 bankruptcy assume they'll complete their bankruptcy plan, only about one third of all bankruptcy chapter 13 debtors do. Many drop out early in the process, without submitting a feasible repayment plan to the court.

In some cases filing chapter 13 bankruptcy may be necessary. However, as you can see from the chapter 13 bankruptcy information presented, it should be avoided, if possible. A competent debt reduction company can help reduce your debts so you don't have to proceed with filing chapter 13 bankruptcy. To find more chapter 13 bankruptcy information, contact your local bankruptcy attorney or research chapter 13 bankruptcy law online.