Chapter 13: Bankruptcy Basics
Many people think that bankruptcy means discharging all debt and wiping the slate clean. While Chapter 7 bankruptcy may look that way, Chapter 13, or “wage-earner’s bankruptcy,” allows debtors to repay much of their debt over three to five years.
The inner workings of Chapter 13 bankruptcy are foreign to most people who have not been through the process themselves. Read on to learn more about how Chapter 13 works, what the process is like and what kind of results you can expect.
The Chapter 13 Bankruptcy Process
While it is possible to file bankruptcy on your own, it is in your best interests to work with an attorney who can guide you through the process and advocate on your behalf.
To file Chapter 13, you will need several documents, including:
- Your most recent federal tax return
- A list of your creditors and the amount owed to each
- A list of property you own
- An accounting of your living expenses
- Your income and its source
After your initial filing, you and your attorney will propose a repayment plan that will repay as much of your debt as possible over three to five years. Once the court approves a repayment plan, you will make regular payments to a court-appointed bankruptcy trustee. The trustee distributes the payment to your creditors in accordance with your plan.
At the end of the term set forth in your repayment plan, your remaining unsecured debts are discharged (or wiped clean).
This process has many benefits for debtors, including:
- Individual creditors may not contact you directly but must go through your trustee.
- You can typically keep property like a home or car while paying off your debts.
- A Chapter 13 repayment plan can help protect your home if you are at risk of foreclosure.
Financial Freedom Is Within Reach. Contact Us For A Consultation.
No one deserves to struggle with insurmountable debt. At Newman Williams, P.C., we are committed to helping you find a solution that puts you in the best position to move forward. To speak with an attorney about your financial situation, get relief from creditors and start moving forward today, please contact us at 570-559-5507.
