1. CHAPTER 13 BANKRUPTCYMyths and Misconceptions

2. Bankruptcy Chapters 3. Bankruptcy is referred to in terms of chapters 4. The Bankruptcy Code is divided into chapters, many of which provide the rules and regulations for specific types of bankruptcies 5. Individual debtors may file using chapter 7, 11, 12, and 13; however, chapter 7 and 13 are the most frequently used 6. Chapter 7 vs. Chapter 13 Bankruptcy 7. Chapter 7 Bankruptcy: 8. Chapter 7 referred to as liquidationTrustee can sell debtors non-exempt assetsMost debts are discharged at end 9. Only takes 4-6 monthsMust pass the means test to use a chapter 7 10. Chapter 13 Bankruptcy: 11. Referred to as a wage-earner bankruptcyUsed by moderate to high income debtors 12. Used by debtors with valuable non-exempt assets they wish to protectRequires debtors to repay most debts over extended period of time (3-5 years) 13. Chapter 13 Repayment Plan 14. Shortly after filing, you and your attorney must develop and submit a repayment plan to the court 15. Debts in the plan are categorized as follows: 16. Administrative and Priority Debts These debts must be paid in full and include things such as court filing fees, Trustee and attorney fees, delinquent alimony and child support, most tax debts, and debts owed to employees 17. Secured Debts Delinquent secured debts must be paid in full if you plan to keep the collateral. These debts include things such as your mortgage loan or vehicle loan. 18. Unsecured Debts All other debts are unsecured debt. These creditors may receive a portion of the debt owed or may receive nothing, depending on how much disposable income is left after the first two categories of debts are paid 19. BENEFITS TO CHAPTER 13 BANKRUPTCY 20. For most debtors, both their financial situation and their credit rating are significantly better not long after filing a chapter 13 bankruptcy for the following reasons: 21. Automatic Stay An automatic stay orders all creditors to stop all efforts at collecting on a debt, including things such as foreclosure or repossession 22. Lower monthly payments During your repayment plan period you will not be required to pay out more each month than you can afford to pay 23. Elimination of some debts At the end of the repayment plan, some debts will be eliminated completely paid or at least payments will be current 24. Improved credit rating By the end of your repayment plan period your credit rating should be significantly improved because you have eliminated some debt and have made payments on time for several years 25. Learn More About Chapter 13 Bankruptcy In Kentucky 26. Click to visit: www.mmslawonline.comContent provided by: Best Legal Practices