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Filing for bankruptcy is often the last option taken by people who have been struggling with debts for a long time. According to Los Angeles based bankruptcy law firm Recovery Law Group lawyers, people have the option of filing under Chapter 7 or Chapter 13. Ideally, Chapter 7 is preferred as it gets rid of all unsecured debts without losing many assets of the bankruptcy filer. If, however, you fail to qualify the means test, you are stuck with Chapter 13. It is therefore important to know what happens in this chapter so that you are prepared to handle what comes your way.
Here are some of the key facts related to Chapter 13 bankruptcy:
- Chapter 13 involves a repayment plan where you are expected to pay back your creditors some portion of your debt.
- The repayment plan lasts for 3 or 5 years depending on whether your average monthly income for the past six months prior to bankruptcy filing was less than or more than the state median respectively.
- The repayment to creditors is done using your disposable income, i.e. the income which is left after deducting all essential monthly expenses such as housing, food, etc.
- If your financial situation deteriorates during the repayment plan (loss of a job, unexpected medical expense, ) which results in non-payment of the dues, you can ask for a modification in your agreement by consulting your bankruptcy trustee.
- After completion of the repayment plan in 3-5 years, you can get a fresh financial start.
For more details regarding bankruptcy procedure and filing, you can contact experienced bankruptcy lawyers Los Angeles, at 888-297-6023.