There are different kinds of bankruptcy with different rules and procedures intended to achieve distinct goals. Filing for bankruptcy under the right chapter is a critical decision. That is why you need to know the basics of bankruptcy.
What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy, in simple terms, is popularly known as “the wage-earners plan.” Compared to Chapter 7, Chapter 13 Bankruptcy is a reorganization of your debts’ repayment plans for 3-5 years wherein creditors make the repayment plan.
The Chapter 13 Repayment Plan
The Chapter 13 Repayment Plan is a detailed legal statement of how you will pay off your debt in a specified time. This legal document must be drawn out and filed in court within the 14-day petition from the day of filing your bankruptcy.
3 Different Categories of Debts under Chapter 13
Priority Debts
Priority debts should be paid during your plan with specific exceptions. Some of the priority debts are government taxes or penalties, child support, and alimony, to name a few.
Secured Debts
Secured debts are the kind of debts that have collateral in them—for example, a home mortgage or a car loan. Depending on the secured debt specifications, you may pay the collateral only or the whole debt itself. Figuring this out all by yourself may be tiresome and not practical, hiring a bankruptcy lawyer to assist you with a smooth bankruptcy process.
Unsecured Debts
These debts are personal loans, credit cards, medical bills, and other unsecured debts. After filing Chapter 13 Bankruptcy, unsecured debts can be discharged.
How to address the creation of your repayment plan?
There are two primary stages of creating the repayment plan, first is taking the means test and then the repayment plan itself. Consulting with a lawyer is highly recommended to assist you with the legal process and not miss any single detail in your petition. Determining your eligibility and options for a repayment plan is more comfortable with a professional’s help. To properly approach creating a repayment plan, you can hire Godfrey Law, right here in Ogden, Utah.
Chapter 13 Means Test
Chapter 13 Means Test is a comparison between your monthly income against the median income. If your monthly payment falls below the median income, you can have the three-year repayment plan. But, if it is higher than the median income or equal, you can have your repayment plan covered in 5 years. The bankruptcy court still has the final verdict on the coverage terms for your repayment plan.
Creating and Filing the Repayment Plan
After you have completed the Chapter 13 Means Test, you can start creating the repayment plan depending on your debts’ uniqueness and categories. Once you have created your repayment plan, you need to file it in court within the 14-day petition for the court to make an approval. Although it may take months to approve your project, you need to start paying your creditors 30 days after filing.
How to follow your Repayment Plan?
After your repayment plan is approved, your repayment interactions should go through with a bankruptcy trustee. A bankruptcy trustee is your middleman between your creditors and your bankruptcy court. A bankruptcy trustee will be the one to collect your repayment according to the plan and will divide them to your creditors. Right here in Ogden, Utah, you can find the best legal assistance for filing bankruptcy – Godfrey Law. You can call us at 801-621-7445, or you can book your appointment by browsing our website.
