General Information on Chapter 13 Bankruptcy
Posted on August 27, 2013 by Site Strategics in Financial Health Tips with Comments Disabled
Filing Chapter 13 is the most favorable option to individuals who want the opportunity to repay their debt and keep some of their assets.
In this form of bankruptcy, you and your attorney will review all your financial records beginning with your income and liabilities, including any back taxes, medical expenses and credit card debt. At the meeting you and your attorney will work out a payment plan that best meets your needs and those of your creditors. For instance, this may involve reducing your car or mortgage payments to a more manageable fee.
The benefit to filing Chapter 13 is that the interest and penalty fees on back taxes immediately stop accruing as soon as your claim is filed with the court. The objective of this form of bankruptcy is to get you current on your payments and satisfy your debts.
As an individual you are eligible to file Chapter 13 if your total unsecured debt is less than $360,475 and your total secured debt is less than $1,081,400.
Unsecured debt is debt with no asset to back it. For example, your credit card or medical bill debts are unsecured because there is no asset to collect if you default on the debt. Examples of secured debt are your home mortgage and your car loan. They are considered secure debts because the house or the car is an asset that can be taken if you do not meet your financial obligation.
An additional requirement for filing bankruptcy in the U.S. is credit counseling. Along with your financial information, you will need to present the court with a certificate proving you completed credit counseling with an accredited agency.
A hearing date is set when everything has been submitted to the court. At the hearing, the court will review all information from you and your creditors and ask questions to determine its accuracy. Determination is usually made at the first hearing (known as the First Meeting of Creditors) and you will receive a document stating the acceptance of your agreement in 30 to 90 days from that date. You need to return for another hearing only if a creditor does not agree with the terms and files an adversary action or motion.
THE FALSE INFORMATION
People may fear filing for Chapter 13 because of certain impressions which are not accurate. These include:
· Both married partners have to file. Truth: Your spouse may not need to file just because you are.
· You will lose all your credit cards. Truth: You may be entitled to keep some of your credit cards.
· You will be fired from your job. Truth: You cannot be fired from your job for filing for bankruptcy.
Filing for bankruptcy is a personal choice that affects everyone differently. Your attorney and financial planner can help you make the right choice.