A General Introduction to Chapter 13 Bankruptcy and Its Offerings
Filing bankruptcy might sound simple enough but it really is anything but. Most complexities arrive when the consumer must figure out which type of bankruptcy to file. Fortunately, the federal government has made things a little easier by lumping the majority of consumers into the requirements governing Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 13 bankruptcy is what will be discussed here and requires the individual to pay off their outstanding debts—either partially or in full—over the course of so many years but it typically does not exceed five years. You should consult a licensed bankruptcy attorney before filing your Chapter 13 bankruptcy. They may be able to guide you toward another alternative or help you find a loophole to make Chapter 13 easier on you and your assets.
Chapter 13 Bankruptcy Explained Further
Before your Chapter 13 bankruptcy is filed you will need to undergo a “means test” which will ultimately determine exactly how much of your debt you need to pay off and how long you’ll have in order to do it. The courts land on this decision based on your income and its relation to the median income in your state. The following types of situations are common in Chapter 13 bankruptcy filings:
• Taxes, student loans, and child support that are deemed ineligible under Chapter 7 bankruptcy
• Mortgages and other loans that need to be paid so property isn’t lost
• The moral belief that all debts should be paid regardless of how long it takes
What You Need to Start Your Chapter 13 Bankruptcy Filing
In order to be eligible for Chapter 13 bankruptcy you will need to have stable income coupled with “disposable income.” Disposable income is any remaining funds after you’ve paid for rent, food, utilities, etc. Once you’ve consulted a professional and have decided that filing Chapter 13 bankruptcy is your best option then your next step is to file a petition in court. In order to so you will need to compile a list including all your assets, liabilities, and creditors. You will also need to file a “Statement of Financial Affairs” that includes a laundry list of your assets.
As stated above, the counsel of a licensed bankruptcy attorney is essential in filing a successful bankruptcy. The intimidating world of bankruptcy is no place for an uneducated civilian and even one who’s done their research still might not be fully prepared. The counsel of a bankruptcy expert will give you the best chance in getting the most out of your Chapter 13 bankruptcy.
