You'll disclose all aspects of your financial condition, including your income and expenses, assets, creditors, and previous transactions in the official bankruptcy paperwork. The case will start once you file your forms and other necessary items, such as a filing fee and proof that you completed a credit counseling class.
You'll have fourteen days to submit your Chapter 13 repayment plan unless you receive an extension from the court. This article provides the reader with a general overview of Chapter 13 bankruptcy. Because of the complicated nature of this chapter, you're strongly encouraged to meet with bankruptcy counsel. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
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Qualifying for Chapter 13 Bankruptcy The benefit of this chapter is that you repay some of your debts—but usually not all—over the course of a three- to five-year repayment plan. But before the court confirms approves your plan, you must fill out the official bankruptcy paperwork and prove that you are: up-to-date on tax filings within debt amount limitations employed and have enough income to cover the required monthly payment, and an individual, not a business however, all financial aspects of a sole proprietor's business get included in the bankruptcy.
Your Income Tax Filings Must Be Current To file for Chapter 13, you will have to submit proof that you filed your federal and state income tax returns for the four tax years before your bankruptcy filing date. You Must Have Sufficient Disposable Income To qualify for Chapter 13, you will have to show the bankruptcy court that you will have enough income after subtracting certain allowed expenses and required payments on secured debts such as a car loan or mortgage to meet your repayment obligations.
You can use the income from the following sources to fund a Chapter 13 plan: regular wages or salary income from self-employment wages from seasonal work commissions from sales or other work pension payments Social Security benefits disability or workers' compensation benefits unemployment benefits, strike benefits, and the like public benefits welfare payments child support or alimony you receive royalties and rents, and proceeds from selling property, especially if selling property is part of your primary business property.
Why File for Chapter 13 Bankruptcy? Here's a list of common reasons a debtor might file a Chapter 13 case: A debtor whose income exceeds the Chapter 7 means test maximum isn't eligible to receive a Chapter 7 discharge and wipe out qualifying debt. A homeowner who is behind on a mortgage payment can pay the arrearages over three to five years and keep the house the same holds true for an overdue car payment.
A debtor can prevent a collection action such as a wage garnishment while paying off a tax bill, overdue support, or other nondischargeable debt in a repayment plan.
A debtor can keep nonexempt property that would otherwise get sold in a Chapter 7 bankruptcy but the debtor will need to pay for the nonexempt portion in the three- to five-year repayment plan. So let us look at how chapter 13 is different from debt consolidation. This debt consolidation would also probably last more than 5 years or forever. If you are in a Chapter 13 only because of disposable income, you are only paying based on your disposable income.
In other words, it is based on what you can afford. The creditor cannot dictate how much you pay them. You are also in the plan only for years. You are only in a plan for 5 years based on disposable income if your average 6 month income is over median income for your region. The Answer is the interest doesn't accrue on the debt you are paying in a chapter 13 if you are paying all of your disposable income.
Plus if a creditor doesn't file a proof of claim, you are automatically discharged from that debt as long as you complete the plan and you gave that creditor notice. Sometimes my client says "I don't want to be in this for 5 years". The answer to that comment is the debtor is going to have that debt forever since they are not allowed to file chapter 7 and don't want to file chapter But dig deeper into the debt-relief process and you may find that what appears simple is the less attractive option.
If you need to file for bankruptcy, Chapter 13 should be your first choice whenever possible. But file a Chapter 13 and you get your choice of bankruptcy far sooner if need be. Chapter 13 Means You Keep Everything.
When you file a Chapter 7 bankruptcy you need to worry about losing nonexempt assets and cash. If you own real estate that rapidly increases in value before the end of your case, you could find yourself packing your bags rather than being able to keep the property. No so in Chapter 13, which allows you to repay a portion of your debts in exchange for keeping all of your assets.
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