7 Common Questions About Chapter 13 Bankruptcy
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Chapter 13 is designed to bring relief to individuals who find themselves facing significant financial struggles. However, as beneficial this type of bankruptcy is, you cannot enter the entire process without any knowledge of it and expect stellar results. Sure, you can always hire experienced Chapter 13 bankruptcy lawyers from La Mesa to help you with everything, but you should always try to know more about the bankruptcy you’re about to file.
What Do People Usually Ask About Chapter 13?
One of the best ways to gather more information about Chapter 13 is to find out the answers to the most common questions people have regarding this type of bankruptcy. Take a look at some of the most frequent inquiries on Chapter 13, and learn more about this bankruptcy in the process:
How Does Chapter 13 Case Work?
This type of bankruptcy allows the individual to repay the majority of their debt through a detailed repayment plan that the Bankruptcy Court approves. Instead of paying individual creditors directly, the person pays a monthly installment to their trustee, who then distributes the funds to creditors, in accordance with the approved repayment plan. Upon finalizing the payments, the debtor receives discharge for the remainder of their dischargeable debt.
How Long Does Chapter 13 Take?
For individuals who earn less money than the median income in their state, Chapter 13 bankruptcy repayments can be finalized in 36 months. However, if the monthly income is above the median for their state, the plan will last for as many as 60 months. The law prohibits Chapter 13 to last for more than 6 years.
What Debt Does Chapter 13 Cover?
The repayment plan formulated under Chapter 13 bankruptcy can pay off virtually any debts an individual has, including both unsecured and secured debts. What’s more, Chapter 13 even allows for repayment of non-dischargeable debts, such as child support and student loans.
Who Is The Trustee?
The trustee is the person in charge of gathering regular payments, distributing payments to various creditors, and administering the case until it gets finalized. The debtor has to cooperate with the trustee to ensure a successful Chapter 13 procedure, since the Bankruptcy Court appoints the trustee.
What Factors Determine If The Court Accepts My Plan?
There are several considerations that the Bankruptcy Court assesses before approving or refusing a proposed repayment plan. In order for the court to approve the plan, it has to fulfill the following criteria:
- The individual has to propose the plan in good faith,
- The debtor must provide full repayment plan for arrears on secured debt,
- The person filing for bankruptcy has to propose payment of unsecured debt that is equal to the amount of money the creditor would get during Chapter 7.
- Finally, the debtor has to commit their disposable income to their repayment plan.
Can Creditors Continue To Collect Against Me During Chapter 13?
Filing for bankruptcy initiates the process of automatic stay that prevents creditors from pursuing any collection action against you, inducing garnishments, foreclosures, and court proceedings. Automatic stay remains in effect during the entire course of the bankruptcy unless the creditor is granted “automatic stay relief” by the court.
What Happens If I Cannot Make My Payments?
Not making payments during Chapter 13 will cause your trustee to file the motion for the dismissal of your bankruptcy. You can either petition to be allowed to catch up on your payments or choose to put a stop to your bankruptcy and convert to Chapter 7 instead.
Who Are The Leading Chapter 13 Bankruptcy Lawyers In La Mesa?
Chapter 13 is one of the best options when it comes to getting out of your debt, but only if you have all the information about it. For example, it’s good to know more about the biggest reasons people choose Chapter 13, as well as what the differences between debt consolidation and Chapter 13 are. Also, if you’re thinking of acquiring new property, you should definitely try to learn more about if you can buy a home during Chapter 13. If you don’t know where to find all this information, turn to Chang & Diamond.
The BK Lawyers are the most experienced, educated, and knowledgeable bankruptcy lawyers in La Mesa and all the surrounding areas. They have been handling different types of bankruptcy cases for many years, and they have helped numerous clients find their financial freedom. Come in for a free consultation and we’ll get to work composing a detailed plan of your bankruptcy while you take a moment to clear your thoughts at the Mission Trails Regional Park. We’re here to give you a fresh perspective on your financial situation. Call us today!