Most people choose to file for chapter 13 bankruptcy when they don't qualify for chapter 7 under the 2005 bankruptcy code. Liquidation bankruptcy is the preferred option because it provides you with an opportunity to eliminate the bulk of your unsecured debt without making any further repayments. Not everyone will qualify, possibly because you've already filed for chapter 7 during the last eight years, or were unable to comply with the means test.

You may decide to file for chapter 13 to protect non-exempt assets, such as a second home, expensive car or a valuable collection. Under chapter 7, you're required to hand over these sort of possessions to a court-appointed trustee. The assets will then be sold and a pro rata payment made to your creditors. Filing chapter 13 provides full court protection from creditors, and enables you to keep hold of valuable items that you'd otherwise be expected to surrender.

You're expected to make a monthly payment to your creditors for either a three or five year period. If your income is below the median for your state, the repayment term will be just three years.

Chapter 13 bankruptcy is when you owe debt that you can no longer afford to pay but you do not want to loose any of your assets such as your house and car. What will happen is, they will put all of your debt together and you must make 1 bog monthly payment on your debt each month and you get to keep your possessions as well.

A chapter 13 bankruptcy is a repayment plan. Your bankruptcy attorney helps you draft a plan that outlines how you will continue paying on your secured debt (things like your mortgage and/or vehicle loans) and how much you think you can pay on the unsecured debts. A chapter 13 plan can cover a time period of as long as 60 months. You make monthly payments to your bankruptcy trustee and at the end of the time period of the plan, the trustee sends out a distribution to your creditors based on the money that was collected during the course of the plan.

The goal of bankruptcy is always to maximize recovery to the creditors. The thought is that if the debtor is earning a good income, then the debtor should make a good faith effort to pay back something against the debts. This is why when the bankruptcy laws were revised in 2005, a Means Test was instituted. A debtor must show in the Means Test that his or her annual income is below the median income level for their household size in their state of residence if they want to file chapter 7. If your income is above the median income level, then you must file a chapter 13.

The reality, however, is that many people have a hard time making their monthly payments in a chapter 13 and many chapter 13 cases end up being dismissed. It is important that your attorney helps formulate a plan that is truly feasible for you and that the court will approve. If there are any changes to your income during the course of your chapter 13 case, you should immediately advise your attorney so that you can request the court approve an amendment to your plan adjusting the payment accordingly.

Chaper 13 Bankruptcy can be utilized as a repayment plan to pay off your debts over a certain time period and can stave off such problems home foreclosure and repossesion of your car. This all begins in your attorney's office where you have to bring all your financial documentation so that they will be to able to set up everything for court. Once going to Bankruptcy Court judge will assign a trustee to handle your case and all payments will be made to them. While Chapter 13 Bankruptcy can have many positives, it also has negatives in that you are restricted in your daily spending habits and are not allowed to apply for any new credit. But with today's challenging economy it is probably the lesser of two evils especially whe it comes to losing your home & other assets