These days, many large companies and well known multimillionaires have filed for bankruptcy. Given the current economic scenario and the ever increasing bankruptcy filings, it has become necessary to understand what bankruptcy stands for. In simple words, bankruptcy refers to the legal procedure which deals with the debt issues of an individual or an organization. There are various types of bankruptcies classified under different chapters and sections. Of these, Chapter 13 is one type of bankruptcy that has become quite predominant in recent times. In this article, you will learn about this chapter in detail.
Chapter 13 Bankruptcy permits the debtor to repay his debt over a stipulated span of time. The repayment has to be made regularly usually over a period of three to five years. This type of bankruptcy has become popular, as the debtor is not required to sell off his properties and assets to repay the debt to his creditors. Chapter 13 Bankruptcy is technically referred to as the Individual Debt Adjustment. It is also known as a wage earner’s plan. Under this chapter, debtors with a regular source of income are allowed to develop a suitable arrangement to repay their debts. This chapter prevents liquidation of property which is quite common while filing for Chapter 7 bankruptcy. Moreover, it enables the debtor to reschedule his secured debts. Therefore, the debtors find it easier to lower the payments he is expected to pay back.
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