When comes to Bankruptcy, most people with
little income and minimal assets choose Chapter 7 Bankruptcy as it offers
faster discharges (usually four to six months) without making the debtor repay
creditors. However, people who own valuable property and have a high income
choose Chapter 13 to safeguard their assets. In exchange for debt relief, they
have to repay their creditors (through discretionary income) by agreeing to a
3-5 year repayment plan.
Who can file for Chapter 13 Bankruptcy?
Criteria for eligibility
The debt limits of filers must exceed a
preset amount (amount differs for secured and unsecured debts)
Debtors must have a steady income for
meeting the end needs of monthly household obligations as well as pay according
to the repayment plan
The chapter does not apply to companies,
which means, only individuals or sole proprietors can apply
Filing Chapter 13 Bankruptcy requires
the professional skill of a Virginia bankruptcy attorney,
as the process in a way complicated than Chapter 7 Bankruptcy.
The Filing Process
Before filing the process, debtors need to go
through a mandatory credit counseling education approved by U.S Trustee’s
Office. After that, debtors have to approach a court clerk to file official
bankruptcy forms by paying a fee, along with the credit counseling education
certificate. If you earn enough to repay the creditors, then you will be asked
to take a second course on debtor education.
The Repayment Plan
You have to propose a repayment plan to
your creditors and the court. You have to satisfy your creditors and the
bankruptcy trustee with your plan. After receiving confirmation from them, the
court will most likely approve your repayment plan.
Types of Debts all debtors Must
Repay
Priority Debts:
They must be paid in full. Priority Claims
include child support, tax obligations, and alimony arrearages.
Secured Debts:
Debtors must regularly pay their car loan
and mortgages (if they want to keep their car or house).
Unsecured Debts:
They are paid after paying off the
aforementioned debts. Fully repayment of these debts are not mandatory provided
you show that you are saving your remaining income to repay them.
You can still save a property even if it
doesn’t fall under the exemption of the repayment plan under Chapter 13. All
you have to do is pay the value of the property.
The length of the repayment length depends
upon the income level of filers. If you are eligible for a chapter 7 plan but
chooses Chapter 13 instead to save your house or car (pay off priority debt),
then the court will provide you with a three-year plan. However, a 5 year is most
likely to get confirmed.
After the completion of the repayment plan,
debtors must show proof to the court that they are paying their priority debts
on time. You should also complete the second budget counseling course. If the
court finds you are in the right track, then all your remaining balance will be
written off (except mortgage or study loans).
For free counseling, you can contact a
professional Virginia bankruptcy attorney.
No comments:
Post a Comment