Filing for Chapter 13 Bankruptcy
There are number of various reasons as to why individuals find themselves with staggering debt that they are unable to repay. While individuals often accrue confounding debt due to mismanagement of their finances, many others are carrying large debt burdens due to job loss or illness. When individuals find themselves unable to meet their monthly financial responsibilities, they often begin searching for ways to find relief from their overwhelming debt. If credit counseling or debt settlement is not an option, bankruptcy may be the only viable debt relief alternative.
If you are considering filing for bankruptcy should first consult with an experienced Chapter 13 bankruptcy attorney. Contact a bankruptcy attorney in your area to help you understand the various chapters of bankruptcy and determine which bankruptcy chapter will be right for you.
What is Chapter 13 Bankruptcy?
Most individuals are familiar with Chapter 7 bankruptcy, but they may not have a clear understanding of Chapter 13 bankruptcy. These two bankruptcy chapters vary significantly and employ different means of arriving at the same outcome: the elimination of debt. Chapter 13 bankruptcy is often referred to as the wage earner's plan, and this bankruptcy chapter involves a restructuring of debts. Chapter 13 bankruptcy offers several advantages:
How Does Chapter 13 Work?
Under Chapter 13 bankruptcy, an individual's creditors will be contacted by a neutral third party such as a bankruptcy attorney. They attorney will negotiate with the creditors to arrive at a mutually acceptable settlement amount. When this settlement amount is reached, the individual will begin repaying all or a portion of their previously existing debts. The debt will be repaid over a period of 3 to 5 years. The individual will be appointed a trustee over their account, and payments will be made to the trustee. The trustee will then distribute payments to the individual's creditors. At the end of the 3 or 5 year term, any remaining debt that still remains unpaid will be discharged at that time.
Bankruptcy Eligibility Requirements
The bankruptcy laws were amended in 2005, and there are two new eligibility requirements that individuals must satisfy before filing a bankruptcy petition. First, individuals must complete credit counseling six months prior to filing a bankruptcy claim. Secondly, individuals will have to complete a means test. The results of the means test will determine if the individual will be eligible to file Chapter 7 bankruptcy or if they will need to file Chapter 13 bankruptcy.
If you are considering filing for Chapter 13 bankruptcy you need an experienced bankruptcy lawyer on your side. Contact a bankruptcy attorney in your area for legal help today.
Did you know?
Before filing a bankruptcy claim, individuals may wish to consult with Chapter 13 bankruptcy law firms. They can learn more about the advantages and disadvantages of Chapter 13 bankruptcy, and how this bankruptcy chapter may be more beneficial to them than other debt relief alternatives.