Chapter 13 bankruptcy is one of three types of bankruptcy filings individuals can pursue. Yet, filing for any type of bankruptcy should be viewed as a critical, last step in dealing with insurmountable debt.
Before considering a Chapter 7, Chapter 11 or Chapter 13 filing, you should have exhausted all options for debt relief. Filing for bankruptcy will negatively affect your credit report for 10 years, making it difficult to borrow money. It may also count against you if you change jobs or seek to rent an apartment.
However, if you have a job, Chapter 13 bankruptcy can also stop foreclosure or keep your car from being repossessed. Once you file, your debts will be forgiven and repaid after a certain time.
When it is over, you will be debt-free and can start again. It is possible to regain your credit after you move out of bankruptcy, providing your financial habits have changed and you pay your bills on time.
If you live in the United States, your bankruptcy would be filed under the U.S. Bankruptcy Code. There are eligibility requirements that you must meet. You must live in the U.S., for example, and you must file in the proper court. You will also have to take credit counseling. If you have questions, you may want to consult an attorney.
You can find a bankruptcy lawyer by looking online, asking a credit counselor, or by getting a referral from a friend. You can file for bankruptcy yourself, but it helps to have a good lawyer in your corner.
Chapter 13 bankruptcy is the most common type that people file. It is sometimes called the "wage earners plan" because those who file this type of bankruptcy are employed and can repay what they owe. Chapter 13 allows you to keep most of your property. This includes your car and your home. The good news is that once you have filed with the court, your creditors may not come calling anymore. They cannot continue to try to collect what you owe them.
However, you must
repay your debts within three to five years. Any income you do not need to pay
for necessities will go toward your debt. You will still need to make your
mortgage payments and your car payments, too.
When you file for Chapter 13, you list all of your creditors and how much you owe. Everything you owe is lumped together into one sum, and you get to pay it all back within three to five years. You will make a monthly payment to the court or someone stipulated by the court who will then make sure your creditors receive their money.
How To File
You may represent yourself when you file for bankruptcy. As noted above, lawyer is recommended, but not required.
Filing yourself can
be difficult. This type of law is technical, and mistakes can be costly. For example, if you
do not file all of the required documents, your case may be dismissed. If that
should happen, your bankruptcy will not take place and you will have to pay
When you go to file, you must bring a list of all of your assets (your property) and all of your debts (the people to whom you owe). If you do not list all of your assets and the judge finds out, he will dismiss your bankruptcy, so do not withhold information.
Additionally, if you do not list your creditors, they may not become part of the bankruptcy. Then you would have to pay them what you owe them. Honesty is very important.
Do not lie, withhold any information, or put false information on the forms or misinform the judge if you speak to him or her in person. Putting false information on your paperwork is called fraud, and you can go to jail for this crime.
Bankruptcy courts generally insist that you attend credit counseling, too. You must do this with a counselor who has been approved by the court. You need to do this within 180 days of filing your bankruptcy. You will have to file paperwork that claims you complied with this requirement. If you do not, your case will be dismissed.
Legal Terms To Know
When you file your paperwork with the bankruptcy court, this is called a petition. Once you have filed your petition, the credit companies or other companies that you owe money cannot come after you. They cannot foreclose or take other action against you.Your creditors are not even supposed to call you on the telephone. This is called a stay.
The court will send your creditors
a notice saying that you have filed for bankruptcy so that they will know to
leave you alone. You can find other information
about Chapter 13 bankruptcy at the United States Courts website at
http://www.uscourts.gov in the bankruptcy section.