Sometimes, an individual with a regular income cannot meet his or her commitments. Their debts can be burdensome and, far beyond their earnings, Chapter 13 Bankruptcy protection may be the best option.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy protection allows individuals with regular income to develop a plan to pay their debts over a period of time. The repayment plan is usually for a period of three to five years. Bankruptcy law prohibits a plan designed for more than five years.
An individual is eligible for Chapter 13 protection if his or her debts meet certain eligibility requirements. Currently those amounts are $336,900 in unsecured debts and $1,010,650 in secured debts. These amounts are subject to the consumer price index and change from time to time.
How Does Chapter 13 Bankruptcy Work?
Before filing for Chapter 13, individuals must ensure that they have met the credit counseling requirement that is necessary for individual bankruptcies. There are exceptions to this rule if there is an emergency situation.
When filing for Chapter 13 bankruptcy, the individual must include all documents required by the court and all information about income, expenses, debts and assets. Also required are tax returns and proof of receipt of credit counseling as well as all applicable filing fees and court costs.
After all documents have been filed and fees paid, the court will appoint an impartial trustee to oversee the case. The trustee will oversee everything related to the case from the evaluation of the information provided by the debtor to the eventual disbursement of payments to creditors in accordance with the payment plan approved by the court.
What are the Bankruptcy Advantages of Chapter 13?
There are several advantages to filing for Chapter 13 bankruptcy if your debt to income ratio makes it impossible to meet your obligations as a debtor. First, once you file for Chapter 13 bankruptcy protection, your creditors must suspend most of their collection efforts. There are only limited collection efforts that can continue under the federal bankruptcy law.
Chapter 13 can be used to protect a home from foreclosure. Applying for Chapter 13 protection will temporarily stop foreclosure proceedings and allow the debtor to catch up on his or her mortgage payments for a defined period of time.
Another advantage of Chapter 13 bankruptcy is that it puts the debtor back in control of his or her situation. It is the debtor who proposes the payment plan to the court. Although creditors have the right to object to the plan and the plan must then be approved by a bankruptcy judge, it is the debtor who makes the initial proposal and must agree to all revisions to the proposal.
Downloading a Chapter 13 is a complicated legal matter. However, when the matter is discharged, the debtor is relieved of all obligations to the creditors involved in the bankruptcy proceeding and can begin to rebuild his or her credit score and financial life.
Speak Today with a Qualified Bankruptcy Attorney Chapter 13
This article is intended to be useful and informative. But legal issues can become complicated and stressful. A qualified Chapter 13 bankruptcy attorney can address your particular legal needs, explain the law and represent you in court. Take the first step now and contact a qualified chapter 13 bankruptcy attorney near you to discuss your specific legal situation.