File for bankruptcy
The decision to file for bankruptcy is not one entered into lightly. Situations have occurred to even bring you to this thought process. In this preparation, it helps to have a full understanding of your options, the consequences and your responsibilities after entering into this type of financial arrangement. Another thing that helps is to have a Chapter 13 attorney St Louis who understands the process and can make sure the decisions you make are the right ones.
Generally, Chapter 13 is considered a reorganization bankruptcy that does not require you to surrender personal property to satisfy outstanding debts. Instead, you will need to make a structured repayment plan to pay off debts within three to five years.
Who is Eligible for Chapter 13?
Unlike a Chapter 7 where proceeds from liquidated assets are used to pay debts, you must show you are eligible to file for Chapter 13. Your income will be used to pay off creditors unless your income is too low or inconsistent.
If either of these applies, you may not be eligible to file. This form of bankruptcy requires regular payments according to a schedule. Additionally, there are debt limitations that could prevent you from filing.
What Amount are You Required to Repay?
Under a repayment plan for Chapter 13, your attorney will help you devise a plan to pay some of your debts in full. These are called priority debts and take precedent over other creditors in line to be paid. Examples of priority debts include overdue taxes and child support payments.
Other debts can also be included in your repayment plan. Secured debts, where the creditor can take specific property for unpaid debt, should be part of the repayment plan. A car note or mortgage payment represents secured debt payments. Late payments from falling behind on secured debt payments should also be included.
Finally, your repayment plan should show whether you will have disposable income after making payments on secured debts. If so, this additional money will go towards unsecured debts. If you do not have any disposable income, you might not be required to pay. However, it does not hurt to make a good faith effort to also repay those debts.
While filing for Chapter 13 is a major step in your finances, it is a process that can seem confusing and stressful. Getting help from an attorney who is familiar with bankruptcy laws can relieve you from feeling overwhelmed as you begin to turn your financial situation around.