Is Chapter 13 Bankruptcy Right for You?
Chapter 13 Bankruptcy allows individuals to reorganize and repay their debt, while retaining their personal possessions and assets. Chapter 13 Bankruptcy is an option available to any U.S. citizen and is the most common type of bankruptcy filed in the United States.
Eligibility requirements of Chapter 13 Bankruptcy state unsecured debts must be less than $307,675 and secured debts less than $922,975. United States Bankruptcy Law 11 U.S.C.109,111 require individuals to obtain credit counseling from an approved credit counseling agency within 180 days before filing.
Oftentimes, individuals facing foreclosure will file Chapter 13 Bankruptcy in an effort to save their home. While filing for bankruptcy can stop foreclosure proceedings, the borrower must continue to make mortgage payments in a timely fashion.
Chapter 13 Bankruptcy offers several advantages including:
• The ability to reorganize secured debts to extend and reduce payments.
• Protects co-signers who are liable with the debtor on consumer debts.
• Work with a professional organization to distribute payments to creditors.
• Eliminates harassing phone calls from creditors and shield individuals from having direct contact with creditors.
Although individuals can file Chapter 13 without legal counsel most people prefer to hire an attorney. A bankruptcy lawyer can help the individual organize paperwork and ensure court documents are properly filled out and filed on time. Individuals who cannot afford an attorney might be entitled to pro bono (free) legal assistance through their state or county Bar Association.
When filing Chapter 13, individuals must first file a petition with the bankruptcy court in the judicial district where they reside. This petition must include a list of assets and liabilities, current income and expenses, repayment plan proposal and proof of credit counseling.
Within three to six weeks of filing the petition, a creditors meeting will be scheduled. At this time, the Trustee and creditors are allowed to ask the individual questions regarding their accounts and either accept or deny the proposed repayment plan.
Creditors must file their claims through the court within 90 days of the creditor meeting. After all claims have been received a hearing on the debtor's Chapter 13 payments plan will take place in front of a judge.
The judge will either accept or reject the payment plan or make modifications to it. Once the plan is approved, the debtor must make regular payments to the Trustee until the reorganized debts are paid in full. During the payment plan debtors are not allowed to take on any new debt without first consulting with the Trustee.
Drastic changes to bankruptcy laws have taken place within the past few years. It is a complicated and lengthy process; however, it can significantly improve the debtor's financial situation and help them get back on track.
Before making a final decision as to whether to file Chapter 13 bankruptcy or not, it's highly recommended to conduct research via the Internet or by consulting with a qualified bankruptcy attorney. One place to start is by downloading the Chapter 13 Bankruptcy manual and forms offered for free through the U.S. Bankruptcy Courts website at USCourts.gov.
Eligibility requirements of Chapter 13 Bankruptcy state unsecured debts must be less than $307,675 and secured debts less than $922,975. United States Bankruptcy Law 11 U.S.C.109,111 require individuals to obtain credit counseling from an approved credit counseling agency within 180 days before filing.
Oftentimes, individuals facing foreclosure will file Chapter 13 Bankruptcy in an effort to save their home. While filing for bankruptcy can stop foreclosure proceedings, the borrower must continue to make mortgage payments in a timely fashion.
Chapter 13 Bankruptcy offers several advantages including:
• The ability to reorganize secured debts to extend and reduce payments.
• Protects co-signers who are liable with the debtor on consumer debts.
• Work with a professional organization to distribute payments to creditors.
• Eliminates harassing phone calls from creditors and shield individuals from having direct contact with creditors.
Although individuals can file Chapter 13 without legal counsel most people prefer to hire an attorney. A bankruptcy lawyer can help the individual organize paperwork and ensure court documents are properly filled out and filed on time. Individuals who cannot afford an attorney might be entitled to pro bono (free) legal assistance through their state or county Bar Association.
When filing Chapter 13, individuals must first file a petition with the bankruptcy court in the judicial district where they reside. This petition must include a list of assets and liabilities, current income and expenses, repayment plan proposal and proof of credit counseling.
Within three to six weeks of filing the petition, a creditors meeting will be scheduled. At this time, the Trustee and creditors are allowed to ask the individual questions regarding their accounts and either accept or deny the proposed repayment plan.
Creditors must file their claims through the court within 90 days of the creditor meeting. After all claims have been received a hearing on the debtor's Chapter 13 payments plan will take place in front of a judge.
The judge will either accept or reject the payment plan or make modifications to it. Once the plan is approved, the debtor must make regular payments to the Trustee until the reorganized debts are paid in full. During the payment plan debtors are not allowed to take on any new debt without first consulting with the Trustee.
Drastic changes to bankruptcy laws have taken place within the past few years. It is a complicated and lengthy process; however, it can significantly improve the debtor's financial situation and help them get back on track.
Before making a final decision as to whether to file Chapter 13 bankruptcy or not, it's highly recommended to conduct research via the Internet or by consulting with a qualified bankruptcy attorney. One place to start is by downloading the Chapter 13 Bankruptcy manual and forms offered for free through the U.S. Bankruptcy Courts website at USCourts.gov.