As someone who may feel weighed down by their finances, the one thing you are likely seeking is some kind of relief. Just knowing how much you are in debt can impact how you feel about yourself, future plans, relationships, and more. If you have evaluated your earnings and debts, and determined that you cannot meet the minimum requirements for paying them off, then learning more about whether bankruptcy is right for you is a reasonable choice.
There are six different kinds of bankruptcy chapters, and Chapter 13 in particular is one of the most commonly used. Here we have answered a few questions that people often inquire about with their lawyer before starting the process of bankruptcy:
How does a Chapter 13 bankruptcy case work?
The first step in bankruptcy is making sure that the chapter you choose is right for your circumstances. For many, this is going to be Chapter 13 bankruptcy. Under this chapter, a debtor is seeking relief from debts through a repayment plan that is feasible based on their financial means. This person must fulfill payments and will be under the supervision of the bankruptcy court. The repayment plan lasts around 3-5 years, and once finished the remaining amount due may be discharged. In other words, the debtor is released from having to pay for the remaining amount due.
In what situations is Chapter 13 preferred over Chapter 7?
Your bankruptcy lawyer can talk with you about whether it is more ideal for you to file for Chapter 13 or Chapter 7 bankruptcy, as the latter is another common chapter that people apply for. However, under Chapter 7, the debtor may have to liquidate their assets in order to pay back creditors. Chapter 13 if often preferred for someone who:
- Has one or more debts that can be discharged under Chapter 13, but would not be under Chapter 7
- Has enough assets to repay most of the debts back, but requires temporary relief from creditors to accomplish this
- Is not eligible for Chapter 7 bankruptcy
- Has nonexempt property that would be lost under a Chapter 7 case
- Prefers to pay their unsecured debts and has income to do so in a reasonable period of time
Will a trustee be handling my bankruptcy case?
Yes, a trustee is appointed by the bankruptcy court to collect payments from you, submit payments to creditors, and handle the case until it is finished. In some instances, a Chapter 13 trustee is necessary to perform other related duties. The individual operating under bankruptcy is required to cooperate with their trustee.
Not knowing what to do next about your finances can weigh heavily on most people. It can be difficult to know whether filing for bankruptcy would ultimately get you the relief you are hoping for. You can take action towards a more sturdy financial footing by consulting with a bankruptcy lawyer, so you can learn more about this resource before starting the process.