Chapter 13 Bankruptcy Laws

The world is constantly undergoing change. This change happens in the form of business, weather and politics, among many other things.

Some of these changes we have direct control over, whereas others are completely random and unpredictable. If one were to think about our economy we would like to think that we control it. That is partially true because we can raise and lower interest rates and control the money supply. For as much as we control, there is an equal amount that we have no authority over. This unregulated control is what makes the economy fluctuate, and as we have all learned in the past few years, it can fluctuate badly. Thousands of people declare bankruptcy on a daily basis in our world. When an individual claims bankruptcy they have several options. Chapter 13 bankruptcy laws are for people that are seeking reorganization in a time of chaos.

When a person files for chapter 13 bankruptcy they are agreeing to submit themselves to a federal bankruptcy court that will control their assets. Chapter 13 bankruptcy laws are there to help the person through financial duress and not to strip them of all of their assets.

Unlike other chapters of bankruptcy, chapter 13 has the ability to temporarily stop foreclosures. This means that when someone cannot pay their mortgage, they are not immediately evicted and have time to get their affairs in order.

Stopping evictions is a powerful tool and allows the individual to seek other living arrangements while the bankruptcy proceedings are taking place. Chapter 13 bankruptcy laws are meant for protection and not to exploit the person who files for it.

One major difference between chapter 13 and 7 is that chapter 7 bankruptcy is a complete liquidation of assets, whereas 13 is a mere reorganization. A federal bankruptcy court can set a time frame between three and five years for a person under chapter 13 bankruptcy laws to pay back the debt owed to their creditors. This enables the debtor to keep some of their assets and also ensures that the creditors recoup some of their losses.