What Is Chapter 13 Bankruptcy?

by | Oct 4, 2012 | General


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Chapter 13 Bankruptcy would not free a debtor of all their debts, an individual in Royal Palm Beach who went through chapter 13 would owe largely the same amount once she or he was done with bankruptcy than as they started. What Chapter 13 Bankruptcy does is it allows for debt consolidation and restructuring under the approval of a federal court. Bankruptcy law can be complex, and the cases are rarely straight forward, especially where Chapter 13 Bankruptcy is concerned. Chapter 7, for point of reference is when an individual is absolved of debt, so Chapter 13 Bankruptcy is more complex because the courts and the lawyers need to find ways to make the debt manageable for the debtor, but to not leave the creditors completely unpaid. With anything that can change the nature of debt structure and debt payment there are a lot of complex issues to handle, some of which are overtly political. Bankruptcy law in all its forms has political implications.

Chapter 13 Bankruptcy is an incredibly important aspect of law. Because it’s debt consolidation, it won’t leave creditors in as bad of a situation as chapter 7, and yet still provides an important service to the debtor, by freeing them of their impending debt crisis, and allowing them to restructure, the court can save a family or business from destitution. Repaying debts, and a healthy fiscal market are important to a functioning economic society, but having people not be crushed wholly under their debt is important as well. While things like Chapter 13 in Royal Palm Beach Bankruptcy and other legal tactics to reduce debt might seem like market intrusions the actual effects are not near as dramatic as they are for the individual. Chapter 13 Bankruptcy makes a much bigger impact on the people seeking debt relief than the people making loans.

Despite its complexity, Chapter 13 Bankruptcy does still have a degree of transparency. When doing business, and investing, predictability is important. You need to be able to predict the likelihood that a loan you give out in Royal Palm Beach Florida is to be repaid in full, just as you would for a business investment in Corvallis Oregon. Because a lot of Chapter 13 Bankruptcy is regulated by federal, instead of state law, it allows a more even assessment of the risks it poses to a lender. What matters most of all is certainty. When rules of debt consolidation and debt payment can change suddenly and at a whim lenders are less likely to lend money to even safe debtors. The other thing is that because the debt is consolidated instead of erased the affect on creditors is smaller.