Chapter 13 Bankruptcy - What do I do during the process?

Chapter 13 bankruptcy is a legal action that allows an individual or couple with regular income to consolidate and repay debts over a period of three to five years. This often gives people the breathing room they need to get back on track financially and to save vital assets, such as a house, car, or family heirlooms.

 

Chapter 13 and Your House

Chapter 13 bankruptcy is great for people facing foreclosure, as the process creates an automatic stay on any foreclosure proceedings initiated by the bank. During your bankruptcy process, the bank cannot foreclose on your home, allowing you and your attorney time to come up with a plan. For example, say you are $5,000 behind on mortgage. The bankruptcy attorney can take that $5,000 and divide it out over 60 months so you'll only pay $80 per month-in addition to your regular mortgage payment.

 

Debtor Education Programs

Before a Chapter 13 bankruptcy is discharged by the court, a person or couple must complete a mandatory debtor education program in person, on the phone, or over the Web. During this course, a government-certified counselor will help the individual or couple complete a budget and learn how to manage financial obligations. The course is educational and helpful. Once complete, the debtor receives a certificate that is filed with the court.

 

Sticking with the Plan

Communicate with your attorney when something changes. You are still going to have to make your mortgage payments, pay your taxes, etc. If you fall behind and something happens, such as job loss, don't assume that there is no help. Your attorney may be able to modify your terms temporarily to allow you a break until you are employed again. You may be able to sign an agreement with the trustee to make extra payments to get caught up. If it turns out that you can't afford to continue the case, you may be able to convert your case to a Chapter 7 to eliminate some of your debt. There are many options your attorney can discuss with you to offer help if things get tough.

 

Ideally, if you can make all of your payments and finish your plan, you're going to be happier and better for it.

 

Financial Survival during Chapter 13 Bankruptcy

Divorce, job loss, and major medical expenses are all valid reasons for filing a Chapter 13 bankruptcy petition. Many people have found themselves needing a fresh start and a way to reduce their money worries. Chapter 13 bankruptcy can help do just that.

 

Maybe before now, you could have afforded to pay more toward your debts, but now you can't. With a bankruptcy filing, if you can't afford to pay back your creditors, you don't have to. You can discharge the debt in a Chapter 7 or you can choose a Chapter 13, which will allow you to pay back the smallest amount possible to get you caught up so you can keep the things you want to keep. All debt is discharged upon completion of the bankruptcy case. It's the fairest, most debtor friendly, best solution in existence to repay your debts! No one can beat it-no other option is better. Financial planners will tell you to go out and get a second or third job, sell your property at a garage sale, live a pauper's life, feel the pain, suffer . . .you don't have to do that! Bankruptcy attorneys don't expect you to suffer in a bankruptcy. You only pay for the things you want to keep, and your attorney will set you up on a payment plan you can afford!

 

Ideally, if you can make all of your payments and finish your plan, you're going to be happier and better for it.