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Chapter 13 bankruptcy changes could be forthcoming

Chapter 13 bankruptcy differs from Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, filers are given the opportunity to pay off one's creditors - or at least pay part of what is owed. The repayment usually occurs over three to five years, and in many cases, the filer is able to keep his or her assets. While Chapter 13 bankruptcy is filed in Federal Bankruptcy Court, many states don't have uniformity when it comes to how each case is dealt with. That is the goal of the Judicial Advisory Committees on Bankruptcy and Civil Filings.

The plan includes a "national plan form" that would be used by all debtors. This "check-the-box approach" would make it easier for bankruptcy trustees, debtors and judges to determine how best to deal with the filer's debt problems. Another part of the plan would allow filers to find out just how much is owed on a secured debt and make creditors object at a hearing, instead of just filing a motion.

Some people feel that the proposed changes would end up causing more disputes between creditors and the filer. This is partly due to a proposed change that would make secured creditors, such as those companies that hold a filer's mortgage or car loan, to file a claim. Only unsecured creditors have to go through that now. In addition, those claims would be due within 60 days instead of 90 days.

The proposed changes were unveiled on Aug. 15. The hope is that the process would become more streamlined and reduce the chance of errors in Chapter 13 bankruptcies. Some caution that while these changes might affect what can be accomplished in a Chapter 13 bankruptcy, it won't likely affect who will be eligible for it.

If you have questions about Chapter 13 or Chapter 7 bankruptcies, it's best to seek answers from an experienced Texas bankruptcy attorney. He or she can help you determine which type of bankruptcy is best for your situation.

Source:, "Changes in the works for Chapter 13 bankruptcy filings" Sherry Karabin, Nov. 15, 2013

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