Filing Chapter 13 Bankruptcy – A Procedural Overview
Chapter 13 bankruptcy law is on occasion referred to as reorganization bankruptcy. It’s very different than Chapter 7 bankruptcy. In a Chapter 7 bankruptcy most all of your debts are eliminated. But, you must lose any belongings that aren’t exempt from seizure by your creditors. Under Chapter 13 bankruptcy law, you aren’t required to relinquish any worldly possessions. But, you’re required to utilize your income to pay most or all of what you owe your creditors. Your payments to creditors are made over time, typically from three to five years. The time frame depends on the amount of your debts and income.
Chapter 13 Bankruptcy Eligibility Prerequisites
Chapter 13 bankruptcy isn’t for everyone. Chapter 13 bankruptcy law calls for applying your income to pay most or all of your debt. So, you’ll have to demonstrate to the court that you’re capable of fulfilling your payment responsibilities. If your income is irregular or excessively low, the court may not allow you to file under Chapter 13 bankruptcy law.
If your total debt load is too high, you’re likewise ineligible to file under Chapter 13 bankruptcy law. Your secured debts can’t be greater than $1,010,650. A “secured debt” is one that grants a creditor the right to take a specific piece of property (like your house or car) if you don’t pay the debt. Your unsecured debts can’t be greater than $336,900. An “unsecured debt” doesn’t permit your creditor the power to take your belongings. An example of an “unsecured debt” is a credit card or a medical bill.
The eligibility requirements of a Chapter 13 bankruptcy are covered in detail in Chapter 13 Bankruptcy: Keep Your Property & Repay Your Debts Over Time.
Starting a Chapter 13 Bankruptcy
Before filing a Chapter 13 bankruptcy, you must complete credit counseling from an agency approved by the United States Trustee’s office. These agencies are allowed to charge a fee for their services. But, if you can’t afford to pay the fee, they have to furnish cut rate counseling and, in a few situations, free counseling.
Chapter 13 Repayment Plans
The most consequential component part of your Chapter 13 bankruptcy paperwork is your repayment plan. It identifies in detail how much money you’ll give to each one of your debts. There’s no authorized form for the plan. But, almost all courts provide their own forms. To learn more about Chapter 13 Bankruptcy repayment plans, read Chapter 13 Bankruptcy: Keep Your Property & Repay Your Debts Over Time.
How Much Will You Be Required to Pay
Your Chapter 13 plan must pay back particular debts in full. These debts are called “priority debts” because they’re interpreted significant enough to rise to the head of the bankruptcy repayment line. Priority debts include child support and alimony, wages you owe to employees, and certain tax duties. Additionally, your plan must encompass your normal payments on secured debts.
The plan must establish that any income you have remaining after making these essential payments will go to paying your unsecured debts. You don’t have to pay off these unsecured debts fully. You simply have to exhibit that you’re giving any left over income towards their repayment.
How Long Is Your Repayment Plan
The length of your repayment plan turns on how much you make and how big your debts are. If your standard monthly income during the six months prior to the date you filed for bankruptcy is larger than the average income for your state, you’ll want to offer up a five-year plan. If your income is less than the typical, you may suggest a three-year plan.
Regardless of how much you bring in, your plan terminates when you pay back all of your debts fully, even if you’ve not reached the three- or five-year mark.
What Goes On If You Can’t Make Plan Payments
If you sustain a job loss after beginning a payment plan or ascertain that you can’t keep up the payments on your Chapter 13 bankruptcy plan, the bankruptcy trustee may change your plan. It’s even possible that the court could permit the discharge of your debts on the basis of hardship. Hardship may include the sudden loss of a job due to a company closing down or a serious debilitating sickness. If the bankruptcy court won’t permit you to modify your plan or permit you a hardship discharge, you may be able to convert to a Chapter 7 bankruptcy.
How Does a Chapter 13 Case End
Once you complete your repayment plan, each left over debt that’s eligible for a discharge is wiped out. But, before you’ll be able to obtain a discharge, you must demonstrate to the court that you’re up-to-date on your child support responsibilities and that you’ve finished a budget counseling course with an agency licensed by the United States Trustee. This budget counseling course is in addition to the mandatory credit counseling you experience before filing for bankruptcy
Related posts:
- Filing Chapter 7 Bankruptcy: A Procedural Overview
- FL Bankruptcy Chapter 7 Overview
- FL Bankruptcy Overview
- Florence Bankruptcy Lawyers Help Determine Chapter 13 Eligibility
- Florence Bankruptcy Attorneys Help Determine Chapter 13 Eligibility
Tags: bankruptcy, Chapter 13 Bankruptcy, discharge, repayment plan
