Chapter 13 filing forms are pretty similar to the forms used for Chapter 7. The information and objectives are the same in both cases. This procedure includes detail of income, assets or properties, expenses, and debts. Along with this information, you shall also provide for a plan that shall manage all the debts in the future 3-5 years. Along with these information pieces, you also need to enclose your latest federal and state tax returns. There has to be proof for income tax filing for the last 4 years. You also have to avail a certificate for credit counseling that has been issued from a United States Trustee approved organization. To know more about Chapter 7 bankruptcy or guidance about anything relating bankruptcy, log on to Recovery Law Group to clarify all your questions and doubts.
The payments usually monthly are made to the bankruptcy trustee who later distributes the same as decided to the lenders. The bankruptcy trustee collects a commission for the tasks he/she performs. In order to initiate the release of debt under Chapter 13, you have to follow the payment plan for the specified period.
What will I have to pay?
The common question with respect to Chapter 13 is what type of debts will be paid and in what proportion. By addressing this question one can easily determine the net liability one may have to bear in the case of Chapter 13 bankruptcy.
- Administrative fee
This type of fee includes the filing fee, trustee commissions that could be 3% and as high as 10% on the monthly payment, and attorney fees. While attorney fee depends on whether you hire an attorney or not, even though it is highly recommended, filing fee and commissions have to be paid out without choice. These debts or fees have to be paid off in full.
- Priority debts
Similar to administrative fees, these debts are also essential and need to be paid in full meaning 100% without any rebate or discharge. This includes debt like alimony, child support, tax debts may be state or federal, money owed to employees, contributions pending for employee benefit fund, etc.
- Secured Debts
All sorts of secured debts home mortgage, auto loans, jewelry loans, etc., need to be paid off in full in order to retain the asset gauged as collateral. There can be a small possibility, where you could get a marginal rebate on paying off debt for secured assets.
- Unsecured Debts
These kinds of debts usually include credit card, utility bills, medical bills, membership of some clubs, payday loans, etc. These debts have high-interest rates and are not secured by any asset, lien or any other guarantee. The payout to these debts is the last priority. Depending on the disposable income and the amount of income available after allocating the same to the priority debts, the percentage of monthly payments under Chapter 13 could vary between 0 to 100%.
Things to note
There are different ways of calculating disposable income and practical tenure of repayment. To find the most beneficial and appropriate one that could be approved easily by the bankruptcy court without too much intervention, it is best advised to consult an experienced attorney. There are different ways of how an unsecured debt can be converted into a secured one. For instance, if you used a credit card for purchasing a luxury item recently, the credit card company might want to prove your intentions of fraud and might want to convert the debt related to fraud. This will turn the debt liability to 100% which could have been 0%.
Similarly, there are secured credit cards, and various other lending traps, which many people discover only after filing bankruptcy. Seeking assistance is essential to making a well-informed decision. Dial in 888-297-6203 for best solutions.