Chapter 13 Bankruptcy Rules

The official text of the Chapter 13 Bankruptcy Rules is contained in the Federal Rules of Bankruptcy Procedure. These rules have a direct impact upon options available to most consumers, and as a result, are highly relevant and important in all debt negotiations.

Why are these rules important?

Everyone qualifies for bankruptcy under at least one chapter. By far the easiest qualification for anyone earning a regular income is Chapter 13. One of the distinct characteristics of this chapter is the option to roll past due payments (including mortgages and IRS taxes) into the plan and extend payments substantially. Because of this unique characteristic, most creditors fear bankruptcy because in practice, even under Chapter 13, little meaningful debt reduction is actually made. Most cases simply languish for months, and then once priority debts are repaid, cases are dismissed by the court by default when payments cease.

Threatening bankruptcy is highly effective, if asserted by lawyers possessing a reputation for quality legal representation. High volume collectors and major corporations know from experience which lawyers follow through. These lawyers are highly effective when negotiating settlements in lieu of Chapter 13.