If you think that filing for bankruptcy is the end of your financial status, and you absolutely misunderstand it.
It is actually a new start to your financial journey. Here, you will get the opportunity to clear all your debts and start fresh.
Especially when you are opting for Chapter 13 bankruptcy of the federal bankruptcy code, you will get the closest thing to a soft landing. It is specially designed for those who are making money but at the same time desperately falling behind trying to keep up with the payments for a lot of things that you have bought on credit.
Under this particular bankruptcy code, with the proper association of Chapter 13 lawyers, you will get a timeline of 3 to 5 years for resolving the debts while you are applying all of your disposable income to debt reduction.
How Does Chapter 13 Bankruptcy Work?
Here, you have to submit a recognition plan, which will safeguard some specific assets, such as your house, against foreclosure or repossession. And here, you are typically requesting forgiveness of other debts.
That is completely different from the Chapter 7 bankruptcy. That is more extreme, and that also liquidates non-exempt assets.
In order to qualify for Chapter 13, you have to fulfill the below-mentioned requirements.
Let’s check them out now.
- You must have a steady income.
- You have to be current on your tax filings.
- You should not have filed for a chapter 13 bankruptcy for 2 years or a Chapter 7 for at least 4 years.
- You must not have unsecured debt of over $419,275, and at the same time, your debt also can not exceed $1,257,850.
All these figures periodically adjust in order to reflect changes in the consumer price index.
When you are filing for Chapter 13 petition actually suspends the payments of any type of debt along with pending foreclosure. This way, you will get relief from creditors during the time the court is considering the plan. However, it does never eliminate the debt.
At the same time, we can give you the hope that your bankruptcy plan will release enough of your income that you are going to make the usual mortgage payments along with keeping your house.
Chapter 13 Process
You first need to find Chapter 13 lawyers who will be able to provide you with a free evaluation and also an estimate on what you need to pay to file.
The usual cost of filing a Chapter 13 bankruptcy is around $400. This is only the filing fee; you need to pay your Chapter 13 lawyers separately.
For documentation and necessary information, you have to provide the following.
- Proof of income.
- A complete list of creditors and also the number of their claims.
- Complete a list of all your monthly expenses.
- List all the properties you actually own and any type of leases that you have in your name.
- Give tax information, particularly your federal tax return, along with any statements of unpaid taxes.
Here, you also need to remember that being a Chapter 13 petitioner, you can not have had any type of bankruptcy petition dismissed in the past 180 days. You are also required to opt for a U.S. Department of Justice U.S. Trustee Program approved credit counseling course in the time span of 180 days.
Once you or your Chapter 13 lawyers have filed your paperwork, you will get a letter from the court clerk in order to notify you, your creditors, and of course, the court-appointed trustee of yours stating your collection activities on all your accounts have been suspended.
It means creditors must stop hounding you to make their payments as soon as possible.
Get The Best Lawyer
From this article, you might have developed a general understanding of Chapter 13 bankruptcy, but in order to complete the process smoothly, we will always recommend you hire one of the best Chapter 13 layers. The professional will always help you with the entire process.
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