Chapter 13 bankruptcy is an option for people struggling to repay their debts but who still have a steady income. It requires devising a reasonable plan for repaying some or all of your debts within a few years, after which time the remainder of your debts are expunged.
Chapter 13 is only one form of bankruptcy you can file for if you have financial problems. A Orlando bankruptcy lawyer can help you to better understand your options, file your case, and manage your case on your behalf.
When to File for Chapter 13 Bankruptcy
Chapter 13 is just one of many options you may have if you can no longer pay your creditors what you owe. According to the U.S. Courts, this chapter might be a good choice for you if:
- You plan to file as an individual (unincorporated businesses and self-employed individuals also count)
- You owe less than $2.75 million
- You have cosigners that you wish to protect
- You are having trouble with mortgage payments and want the chance to save your home
- You would prefer not to have direct contact with your creditors
- You need more time to reorganize and repay your debts but are not in such dire straits that asset liquidation is your only option
- You have a regular source of income
If you are unsure whether you meet these requirements, a bankruptcy attorney can review your situation and help you determine what to do.
Alternatives to Filing for Chapter 13
Even if Chapter 13 sounds like the right choice for you, it is still a good idea to let our bankruptcy lawyers walk you through your options. You might benefit more from:
- Going to a credit counselor: You must do this before filing for bankruptcy. If the counselor can help you consolidate or otherwise deal with your debt, you may not need to file for bankruptcy.
- Renegotiating with your creditors: Your creditors want to get paid. They may get paid more if they are flexible enough to renegotiate the terms of your loan instead of pushing you into bankruptcy.
- Filing Chapter 7: Chapter 7 bankruptcy operates under different rules than Chapter 13 bankruptcy. You should be sure you understand the differences before you file.
- Waiting to see what happens: Rushing into bankruptcy is not a good idea. Sometimes, financial problems can improve on their own without the need for such drastic action. At the same time, waiting too long can also make matters worse. It is a difficult balance to strike, but our bankruptcy law firm can help.
To consult with an experienced bankruptcy lawyer today
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Creating a Repayment Plan Under Chapter 13
One of the key features of filing for Chapter 13 bankruptcy is the repayment plan. This is how the plan works:
- After filing Chapter 13 on your behalf, your lawyer will help you devise a plan for repaying some, if not all, of your debt.
- This plan will require you to make regular payments for three to five years.
- Your attorney will collect evidence that shows you can follow through on the plan and make all your payments. This evidence will include your tax returns and other financial documentation.
- Once you agree on a plan, your lawyer will show it to your creditors and to the court. Your creditors must approve the plan before you can move forward.
- If the plan receives creditor approval, you are now bound by the plan’s terms. Once you fulfill those terms, any remaining debt is discharged, and you do not owe your creditors anything else.
- If the plan does not receive creditor approval immediately, your attorney will determine their objections and work with you to devise a plan that satisfies everyone.
A repayment plan can provide you with much-needed predictability and structure after months or years of financial difficulties. Chapter 13 allows you to get a fresh start by giving you more “breathing room” away from creditors as you pay off as much as you can.
Consider Your Options Carefully Before Filing Chapter 13
A debt-free life may not seem possible right now, but with the proper guidance, you can free yourself of overwhelming debt and move on with your life. Chapter 13 is just one way to achieve that end.
There are numerous pros and cons to filing Chapter 13. A bankruptcy lawyer can ensure you understand them before you act. For example:
Chapter 13 Discharges Some Debts, but Not All
Say you have fallen behind on your mortgage payments. Chapter 13 will help because it gives you the chance to catch up while preventing foreclosure. However, if you have not made alimony or tax payments, Chapter 13 will not discharge those debts, so you may need to seek an alternative.
Chapter 13 Affects Your Credit Score
Your credit score will suffer no matter what kind of bankruptcy you file. That said, the effect differs depending on the chapter you file under. Chapter 13 will impact your credit for a shorter time than Chapter 7.
Chapter 13 Requires Effort
Although bankruptcy is a valuable lifeline for many, the rewards take work. You will be expected to abide by all relevant rules and regulations. Failure to do so could jeopardize your family’s future.
The bankruptcy lawyers at our firm can guide you through this confusing, time-consuming process. We can give you the confidence to make the right decision and move ahead with a clean financial slate.
Learn More About Chapter 13 From Our Bankruptcy Attorneys
At Bogin, Munns & Munns, we treat clients like family. We understand how emotionally fraught the bankruptcy filing process is and can make it easier to bear by prioritizing your needs and handling as much of your case virtually as we can.
Call for a free consultation with our compassionate, fair-minded legal team to determine if Chapter 13 bankruptcy is right for you.
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