Chapter 13 bankruptcy is also referred to as debt reorganization or debt adjustment. This is due to the fact that this form of bankruptcy protection does not eliminate your debt, but rather restructures the debt into a payment plan that is based on your ability to pay over the course of 3–5 years. It is sometimes referred to as “wage earner” bankruptcy because you must have an ongoing income since you are required to make regular monthly payments according to a payment plan. This form of bankruptcy can be a good option for those that do not qualify for Chapter 7 bankruptcy protection, as well as those that are interested in retaining a greater portion of their assets and property (assuming they have the ability to make payments according to the payment plan). Chapter 13 bankruptcy also offers a broader discharge of debts than Chapter 7. Our skilled Boca Raton Chapter 13 bankruptcy lawyers are committed to helping you find a way out from under your debt.
The first thing you need to do is to determine if Chapter 13 bankruptcy protection is right for you or if you would be better served by filing Chapter 7. For some debtors, it is not an option due to income qualifications for Chapter 7.
Once you’ve determined that Chapter 13 bankruptcy is the best option for you, you then need to file a petition with the bankruptcy court. Chapter 13 bankruptcy is not for everyone, and for those who qualify for Chapter 7 bankruptcy protection, it is usually not the preferred option. However, there are some reasons to consider Chapter 13 bankruptcy.
The first, of course, is if you are facing serious financial difficulties and do not qualify for Chapter 7 protection. Another reason to consider Chapter 13 over Chapter 7 bankruptcy is due to the fact that you can keep all of your assets and property.
Chapter 13 is often a good solution for individuals that have ongoing income but who are having extreme difficulty keeping up with their monthly debt payments. The debt restructuring plan can allow people to retain their assets, come up with a manageable way to pay back their debt, and can stop collection agency harassment, late fees, high interest rates, and home foreclosure action.
Once you’ve determined that Chapter 13 bankruptcy is the best option for you, you then need to file a petition with the bankruptcy court.
Once all financial documentation has been submitted to your bankruptcy attorney, they will determine the monthly payment amount that you can make to satisfy debts. This amount is based on a calculation of current and future income levels as well as a consideration of reasonable and necessary living expenses. A portion of the funds remaining at the end of the month, considered “disposable income”, is required to be used to pay your creditors. Once the monthly payment is determined and a debt repayment plan is put into place (typically spanning 3 -5 years), the debtor makes one monthly payment to the trustee, who then distributes the funds to creditors on a pro-rata basis.
Filing Chapter 13 can be on your credit report for up to 10 years. Since you will be repaying debts, your credit will likely strengthen after filing.
If you are seeking legal guidance for Chapter 13 bankruptcy, our attorneys can assist individuals that are struggling with debt. We understand that this is a difficult time and we can provide the help and support that you need in order to get the best outcome.