Chapter 13 Bankruptcy: 13 Things You Need To Know

Debt got you feeling overwhelmed? Depending on your debt and assets, there are different types of bankruptcy available, if you meet the criteria. If you have been contemplating bankruptcy, here are 13 thing to know about filing for a Chapter 13:

1.      What is a Chapter 13 bankruptcy? Chapter 13 bankruptcy enables people with an income to repay their debts over time.

2.      It will buy you some time. Usually in a Chapter 13 bankruptcy, you will commit to a repayment plan that lasts around five years.

3.      You must have a job. To be eligible for Chapter 13, you need to have a job and a decent income.

4.      There are debt limits when filing Chapter 13. There are limits to the debt that you can have when filing a Chapter 13; if you owe too much, you may need to file a Chapter 11, instead.

5.      Credit counseling is mandatory. Know that you will have to complete a credit counseling education session, usually online, and present a certificate of proof to the court. This evaluation and class help to determine if you have enough income to follow-through with a repayment plan.

6.      You will need a plan. You will need to present a repayment plan to the court and to your creditors. This plan may be disputed by creditors and the bankruptcy trustee, who oversees your case.

7.      You won't lose your home. If you can afford to make your payments, you won't lose your property – including your home, if applicable.

8.     Your payment could change. If your income decreases during the repayment phase of your bankruptcy, the court may modify the amount paid to your creditors. If you face extreme financial hardship, the court may allow you to discharge these debts altogether.

9. You might be able to convert to a Chapter 7. If you can't pay your repayment plan and you are not permitted to discharge debt, you might be able to switch to a Chapter 7 bankruptcy. While you risk losing nonexempt and unsecured property, you would still be eligible to get your debts discharged and, eventually, be virtually debt-free.

10.  You can't discharge student loans. Student loans are one of the debts that cannot be discharged and that you should expect to repay during and after your bankruptcy filing.

11.  Don't wait to re-pay. Your payments for the Chapter 13 repayment plan will begin the month after you file. There is no grace-period during this time.

12.  It can be complicated. Bankruptcy cases can get complicated. While you may be able to serve as your own representative during a Chapter 13, it is ill-advised. Most courts and trustees will encourage you to speak to a lawyer before proceeding.

13.  Talk to an attorney. It costs nothing to speak to an attorney and find out more about filing for Chapter 13 bankruptcy.

Make an informed decision related to filing a Chapter 13 by first speaking with a reputable Chapter 13 bankruptcy lawyer. A lawyer is in the best position to make recommendations to you regarding your options, based on your needs, assets, and debt.