If you have already explored other options and zeroed-in on bankruptcy as the only solution to your debt problems, chapter 13 bankruptcy might be something that you should consider. One of the biggest advantage of chapter 13 bankruptcy is that it can stop foreclosure proceeding on your home and hence save your home. However, there is no magic that will do the trick for you. You have to ensure that you adhere to court’s orders and the decided repayment plan in order to ensure that you are finally safe and debt free.
Before filing for chapter 13 bankruptcy
It is quite obvious that you should look up the eligibility criteria before filing for chapter 13 bankruptcy. There are certain conditions that have been defined under the bankruptcy law. Though a professional advice is the best in such matters, here are 2 things that you should know upfront:
- Chapter 13 bankruptcy is not meant for corporations or partnerships. It is for regular-income people.
- There is a certain amount (a maximum limit) of secured and unsecured debts that you can owe in order to be eligible for filing for chapter 13 bankruptcy.
Besides this there are other criterion too but, as stated above, these are the most important.
So, once you have established your eligibility, you might want to hire a chapter 13 bankruptcy lawyer in order to help you with rest of the process. In fact, you might approach the lawyer upfront and he/she can also help you ascertain your eligibility for chapter 13 bankruptcy. While hiring a lawyer, you should check his/her credentials and ask for references. You might as well consult your friends and family in order to get some recommendations.
Also note that you must undergo credit counseling from a government-recognized body before you file for chapter 13 bankruptcy. This is important not only to uncover the alternatives to bankruptcy (that you might be unaware of) but is also a requirement for filing chapter 13 bankruptcy.
Chapter 13 bankruptcy process
If you have hired a lawyer, he/she will guide you through the process. However, you too should know the chapter 13 bankruptcy process at a broad level.
So, you would be filing for chapter 13 bankruptcy in the bankruptcy courts in the area where you live or are domiciled. There are several documents that need to be submitted as part of filing chapter 13 bankruptcy. To state it in a simple manner, all the documents that reflect your financial position would be required including:
- Your income, expenditure related documents.
- Your assets and liabilities statements.
- Leases, contracts and other financial statements etc.
As stated before, besides the various documents you will also need to produce a certificate that shows that you have undergone credit counseling from a government-recognized/approved body. And there are other documents that are required too e.g. tax statements etc.
As far as chapter 13 bankruptcy forms go, you can download them from the government website (https://www.uscourts.gov/forms/bankruptcy-forms). That’s the easiest. Of course, there are various fees too that you need to pay e.g. administrative fee, filing fee etc.
It is important to note here that as soon as you file your chapter 13 bankruptcy petition, the creditors are required to stop all collection activities. So, that’s a bit of a relief.
The bankruptcy court will appoint an impartial trustee to administer your bankruptcy case. The trustee will call a meeting of creditors (which you too would be required to attend as the debtor) in order to discuss the matters, and a repayment plan will be worked out for you to follow. And if you follow this plan, then over a period of 3 to 5 years you would be out of debt and all the related trouble.
Again, all this has been explained in a way that it might sound very simple to you; but these are intricate legal matters and you should take professional advice in such matters.