What You Should Know About Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is known as a wage earner's plan. With this chapter, you are supposed to propose a repayment plan that you will commit to for 3-5 years. During this period, creditors are forbidden from engaging in any collection efforts. It is essential to hire a bankruptcy attorney to help you file for bankruptcy. Here are some of the steps involved in filing a chapter 13 bankruptcy.

Credit Counseling

The first step in filing for bankruptcy is filing bankruptcy forms. You will be required to pay a bankruptcy filing fee and to present a certificate showing that you have received mandatory credit counseling education. This training helps determine whether you have enough income to pay your creditors.

You will also be required to take another debtor education training session after you file for bankruptcy. Many people are required to pay for the course. However, you may get the training for free if you cannot afford to pay. 

Attend Hearings

After filing for bankruptcy, you will have to meet with a bankruptcy trustee. The trustee will check the bankruptcy forms, identification, and repayment plan. You and your bankruptcy lawyer will go to a confirmation hearing after the meeting of creditors.

At the confirmation hearing, the bankruptcy judge will either approve or reject your plan. A creditor can file an opposition with the court. After checking all objections and listening to your lawyer's arguments, the judge will decide whether to approve your plan.

Bankruptcy Discharge

Chapter 13 bankruptcy involves an automatic stay to protect you from creditors. Unless the court authorizes otherwise, no creditor can collect a debt from any person who's liable together with the debtor. This means a chapter 13 bankruptcy will save a home from foreclosure. The automatic stay takes effect when a person files the Chapter 13 petition.

After completing the payment plan, your bankruptcy will be discharged. The discharge relieves you of any obligation to pay any balance on unsecured debts. Provided you pay the money stated in the plan, you will be relieved from all your debts.

Chapter 13 offers numerous benefits over other forms of bankruptcy. With this type of bankruptcy, you will be able to save your home from foreclosure. This filing also eliminates delinquent mortgage payments. You can also reschedule secured debts and extend them. To understand the eligibility for chapter 13, make sure you consult a bankruptcy lawyer or firm today.