There are people who experience financial hardship and find it difficult to pay off their debts. Sometimes it’s because they lost a job, sometimes it can be medical problems, or disasters like flood and fire. When these kinds of things happen, the people involved might be able to file for bankruptcy Chapter 7 in the United States.
There are other circumstances where people have severe debt and could actually make their monthly payments if they could get them down to where they’re manageable. These people would need to speak with a bankruptcy lawyer and look into filing Chapter 13 bankruptcy to get the relief they need.
Filing Chapter 13
This term is taken directly from Chapter 13 of USC Title 11 (the governing laws of bankruptcy). Before you can file for this you need to take a ‘means’ test to see if you’re capable of paying off any of your debts.
If you are found to be eligible for Chapter 13, then you can get a structure repayment plan put in place that allows you to make affordable payments. They terms is usually between 3 and 5 years and when it’s finished your debts are discharged. There will be paperwork that outlines your obligations to keep you on track, like what creditors get paid what amount and on what day of the month.
This plan will be very detailed and contain information concerning any property or other assets you may have. Bankruptcy trustees along with creditors may object to some of the language in your paperwork when you go to bankruptcy court. It is the court that makes the final decision regarding you and your debts.
Which debts will be eligible for a payment plan?
Debts are organized into various categories so they can be paid back via Chapter 13. That includes unsecured priority claims, secured claims, and general unsecured claims. It’s crucial that a person filing Chapter 13 fully understands the conditions of the repayment schedule.
Secured Claims – These are debts that are connected to some type of collateral. That means if they don’t get paid, creditors can take whatever asset is connected to them in lieu of payment. They could take your car, your home, or valuables in order to recover what they’re owed. There is usually interest involved as well as the principle. There are times when it’s possible to pay less than the actual amount you owe, and this is known as a ‘cramdown’. You would need to call a law firm to get more information on that.
Unsecured Priority Claims – This category includes debts that ARE NOT secured with collateral, but have been seen as a higher priority than your other general unsecured claims as laid out in the Bankruptcy code. Debt from taxes are included in this category, along with child support and alimony, personal loans, medical expenses, and utilities. Luckily, in the provisions laid out for filing Chapter 13 most people will only have to pay back a percentage of their debts and not the entire amount. You should always make sure you check this out with your attorney before you take anything for granted.
Put Forth Your Very ‘Best Effort’
One you have your plan for repayment in place, it’s is assumed you are going to put forth a ‘good effort’ to maintain your payment schedule. That means all of your disposable income will be used for repaying your debts, in accordance with the standards and guideline of your repayment plan. You will have to complete a Form 22C which helps the court to determine what the proper amount should be for your monthly payment schedule. They will base these figures on your monthly wages and what you make a year. They will try to make sure your payments are affordable and don’t cause you any further hardship. The whole point of bankruptcy is to get you some relief from debts that are too difficult for you to repay. By putting forth your ‘best effort‘ you can get the help you need and get rid of the stress and burden of mounting debts.
Qualified Legal Help
One of the biggest decisions you have to make when you’re considering filing Chapter 13 is what attorney you want to represent you. You want an attorney who specializes in Chapter 13 and is familiar with all the ‘ins’ and ‘outs’ that goes with it. There are a lot of benefits to be gained from filing bankruptcy when it’s needed, and when it is done right. You do, however, need an attorney who can get you through it. You need someone who can keep you aware of all the precautions you should take, and who knows the process well. If you are struggling with your debts and need some relief, you should contact our firm today. If you are seriously considering filing for Chapter 13, then let Attorney Matthew C. Hines help you. He is experienced in bankruptcy cases and ready to help. Grab yourself a FREE consultation and see what our firm can do for you. You can reach us at (770) 941-0913 .