Chapter 13 is a code which allows you to repay debts as per a payment plan over the next 36-60 months. The payment plan focuses on retaining assets and debt pay off from disposable income. Chapter 13 can be advantageous, but you need to know many things about the same. The in-depth details about Chapter 13 will be discussed shortly.
Eligibility
Chapter 13 bankruptcy has some eligibility criteria just like other criterions. Firstly, there is a debt threshold for secured and unsecured debt. You might want to know about the threshold at Recovery Law Group. If you exceed the threshold, you are not eligible to file for Chapter 13 bankruptcy. There are ways and exceptions to achieve eligibility to Chapter 13 also, which you will learn only when you get in touch with a qualified attorney.
Apart from the debt threshold, one should also have a steady and consistent income in order to qualify. Since Chapter 13 is all about a future payment plan, steady income is the basic requirement for the plan to prosper. An ideal candidate would be who is not near the retirement age and is getting a W-2 wage salary every month consistently. With this flaw, businesses do not qualify to file for bankruptcy via Chapter 13. This is suitable only for an individual filer.
The process involved for filing bankruptcy under Chapter 13
To be honest, Chapter 13 bankruptcy is beneficial sometimes but far more complicated than Chapter 7 another alternative available with the individual filers. To begin with, you need to pay for a credit counseling fee and get counseled on your irresponsible financial management that has led to bankruptcy. This course has to be completed from the recognized facility and a certificate of complication has to be presented when filing for bankruptcy in California. The fee can range between $25-$35 or maybe even higher. The sad part is that Chapter 13 filers rarely get any discount or rebate or free counseling classes. Adding salt to wounds, you shall pay a bankruptcy filing fee with the certificate of completion to begin your process of bankruptcy.
The big, fat repayment plan
The repayment plan is under the spotlight in Chapter 13. Every lender wants to get maximum debts restored while as a bankruptcy filer, you want to release as much of debt possible. The good thing is that the filer first proposes a repayment plan and it not enforced on the filer by the court or the lenders. However, due to the contradicting interests of the lenders and the debtor, the plan may always be in a controversial space. The filer has to sit and analyze his/her disposable income and arrive at the net monthly payouts he can make for the next 36-60 months in order to clear as much debt as possible. There are three basic requirements for the plan to be approved-
- It should be practical and feasible. Your entire income cannot be payout towards the debts, nor a small chunk of disposable income shall be satisfactory for all debts. So, the plan should not only look excellent on paper but should also be feasible and practical to implement in the future.
- The plan should be put forward in good faith and there should be no intention of releasing the debt. There no way to demonstrate good faith perfectly but definitely it should put forward all facts and should be focused on creating a reasonable and practical settlement option.
- Finally, the plan should be compatible with the bankruptcy law book. There are some rules to be followed irrespective of whether the lender and debtor have compromised. Such comprises have to be sorted out outside the court and rules need to be followed strictly in the bankruptcy court and the bankruptcy trustee keeps you on your toes for that.
Keeping up with the plan
After getting the payment plan approved, it is important to keep up with the monthly payments as indicated in the plan. If your income has changed (decreased) the plan might need to be modified and under the hardship exemption, a certain portion of debt can be discharged. The hardship could be illness, change in work location, significantly higher cost of travel or any other expense related to the income generation activity, etc. Depending on circumstances you may or may not be exposed to interest charged by the lenders. For better advise and suggestions contact 888-297-6203 right now!