Are you considering filing for a Chapter 13 bankruptcy? Think it might be the best choice for you? This option is for you are either ineligible for Chapter 7 bankruptcy or if it is your desire to at least pay something to all of your creditors. A Chapter 13 bankruptcy can be especially helpful if you are trying to stop foreclosure on your home and keep your car from being repossessed. In addition, it can stop all of the late fees and penalties that accompany falling behind on your bills. This can be crucial as you attempt to put your finances back in order and acquire some breathing room. An experienced bankruptcy attorney can help you determine if this is the best option for you and then help you to start the process.
If in fact you do not meet the "threshold" for filing a Chapter 7 bankruptcy (you have too much income versus the number of people living in your home or you have filed for Chapter 7 within the last eight years) and still wish to file, you must file under Chapter 13. Chapter 13 bankruptcy involves devising a payment plan based on your monthly disposable income. This is the amount you have left after paying your monthly living expenses. The court will determine what your reasonable living expenses are as part of the Chapter 13 process.
Your attorney will review your finances and submit a proposed payment plan to a court-appointed Chapter 13 trustee. If the trustee approves it, you make payments to the trustee who then makes monthly payments to your creditors. The plan can last three to five years and will end at that time no matter whether you have completely paid off your creditors or not. It is likely they will not get all they are owed-you only repay what you can afford.
A Chapter 13 plan can be amended at any time based on changes in your income or monthly budget. In addition, once you file for a Chapter 13 bankruptcy, an automatic stay goes into effect, ending all harassing phone calls or lawsuits for the period of the reorganization.
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