Filing Chapter 13 Bankruptcy
If you are considering filing Chapter 13 bankruptcy, there are many things you need to familiarize yourself with before you make this very important decision. Even before you decide to file for bankruptcy, you must receive credit counseling from a company that the United States Trustee's office pre-approves. These agencies do charge a fee for the initial consultation, but if you cannot afford it, they must offer you the service at a significantly reduced rate. Once you find an agency to help you with the paperwork, you are required to also pay the bankruptcy filing fee, which is approximately $275.
Credit Card Bankruptcy
Many people are not familiar with Chapter 13 bankruptcy, and assume that if you are behind on bills and your credit cards are all maxed out, you can wipe the slate clean simply by filing for bankruptcy. That is more in line with Chapter 7 bankruptcy where you can have all your debts cancelled, and most of your assets and properties need to be turned over to the trustee of the creditors. You really need to understand the basics of Chapter 13 that we will outline here, before you run to an agency expecting to wipe away your debts.
In Chapter 13 bankruptcy, you are ordered to pay back all of the debts or an agreed portion of them, over the next three to five years. You do get to keep your property which is a huge plus when filing this way. In the Chapter 7 bankruptcy we discussed earlier, you get the debts wiped clean, but you lose your property. Many agencies call the Chapter 13 bankruptcy a "Reorganization Bankruptcy", because you are allowed to keep your possessions, you are simply moving and stretching your current debt over a maximum five year paying period. In time the end result is you will have paid back all the creditors, while being able to maintain some level of normalcy in your life.
Many people feel that bankruptcy is a free pass to get out from under, and start all over again. This is not the case, and the court's do not take these filings lightly. You must be able to prove to the court that you are in trouble in the first place, and then you must be able to prove that you can afford to make the monthly payback payments that you agreed to with the credit agency. Many courts look at your income and determine if your pay is to erratic to be able to pay back the debts, and may deny you the ability to file Chapter 13 bankruptcy.
The main focus of the Chapter 13 bankruptcy is the repayment plan. You will be guided on how to structure the plan in a way so you can afford to make the payments over a three to five year plan. Your credit agency representative will explain to you there are priority debts that need to be put to the front of the line when paying back debts. These debts, such as alimony, child support or back taxes, need to be paid first and paid back in full. You will also need to have your secured debts near the top of the list. These include car payments or home payments.
Any income you have left after paying those two components of the plan, will then go towards your unsecured debts, such as credit card loans and your doctor bills. These debts are usually not paid back in full, and many debtors will allow an agreed upon lower settlement amount to wipe the debt clean. As the bankruptcy approaches the end of the payback period, and you haven't paid everyone back, the credit agency can modify or extend the bankruptcy at that point. The final step of the Chapter 13 bankruptcy is called the discharge. This is when you paid everyone back according to the agreement, and all remaining debts are wiped clean.
Read more at DenverBankruptcyLawyerHelp.com and take our free bankruptcy evaluation.
File chapter 13 bankruptcy
Credit Card Bankruptcy
Many people are not familiar with Chapter 13 bankruptcy, and assume that if you are behind on bills and your credit cards are all maxed out, you can wipe the slate clean simply by filing for bankruptcy. That is more in line with Chapter 7 bankruptcy where you can have all your debts cancelled, and most of your assets and properties need to be turned over to the trustee of the creditors. You really need to understand the basics of Chapter 13 that we will outline here, before you run to an agency expecting to wipe away your debts.
In Chapter 13 bankruptcy, you are ordered to pay back all of the debts or an agreed portion of them, over the next three to five years. You do get to keep your property which is a huge plus when filing this way. In the Chapter 7 bankruptcy we discussed earlier, you get the debts wiped clean, but you lose your property. Many agencies call the Chapter 13 bankruptcy a "Reorganization Bankruptcy", because you are allowed to keep your possessions, you are simply moving and stretching your current debt over a maximum five year paying period. In time the end result is you will have paid back all the creditors, while being able to maintain some level of normalcy in your life.
Many people feel that bankruptcy is a free pass to get out from under, and start all over again. This is not the case, and the court's do not take these filings lightly. You must be able to prove to the court that you are in trouble in the first place, and then you must be able to prove that you can afford to make the monthly payback payments that you agreed to with the credit agency. Many courts look at your income and determine if your pay is to erratic to be able to pay back the debts, and may deny you the ability to file Chapter 13 bankruptcy.
The main focus of the Chapter 13 bankruptcy is the repayment plan. You will be guided on how to structure the plan in a way so you can afford to make the payments over a three to five year plan. Your credit agency representative will explain to you there are priority debts that need to be put to the front of the line when paying back debts. These debts, such as alimony, child support or back taxes, need to be paid first and paid back in full. You will also need to have your secured debts near the top of the list. These include car payments or home payments.
Any income you have left after paying those two components of the plan, will then go towards your unsecured debts, such as credit card loans and your doctor bills. These debts are usually not paid back in full, and many debtors will allow an agreed upon lower settlement amount to wipe the debt clean. As the bankruptcy approaches the end of the payback period, and you haven't paid everyone back, the credit agency can modify or extend the bankruptcy at that point. The final step of the Chapter 13 bankruptcy is called the discharge. This is when you paid everyone back according to the agreement, and all remaining debts are wiped clean.
Read more at DenverBankruptcyLawyerHelp.com and take our free bankruptcy evaluation.
File chapter 13 bankruptcy