Using bankruptcy to receive debt relief is a smart move for many people. While some people benefit from Chapter 7, others benefit from Chapter 13. Your attorney can determine which branch you should use. If the attorney suggests Chapter 13, it is likely because that is the branch that would provide the most relief to you. If you plan to use this branch, here are the basic principles and steps you will follow.
You Must Qualify for It
The first step with Chapter 13 is qualifying for it. While there are several factors that matter, the essential one is your income. You must prove that you have enough money coming in each month to repay your debts. If you can prove this, you can most likely use this branch. Additionally, your attorney will review your finances to ensure that this is the branch that will offer the most relief.
The Repayment Plan
The next part of Chapter 13 to understand is the repayment plan. When you begin working on filing your documents, your attorney will work on the repayment plan. The plan is not final until the court approves it, and it might last for 36–60 months. The repayment plan is what you must follow if you use Chapter 13. You must make the payments as scheduled to the bankruptcy court. The court uses these payments to pay your creditors. The repayment plan will not require paying all your income to the court. The court will leave you with enough money to use for your routine bills, such as groceries and gas. You will not have a lot of extra cash during this time.
Changes to Your Finances
During the plan, you must report all changes to your finances to the court. If you get a pay increase or bonus at work, you must tell the court. If anything with your finances changes, you must report it.
The last part of a Chapter 13 case is a discharge. You receive the discharge when you complete your plan, which takes up to five years. At the end of the plan, the court views your case. If you successfully completed the plan, the court might discharge debts you still owe. Additionally, you will no longer have to make payments to the court. Your case will close, and you can move on with your life.
If you would like to use Chapter 13, talk to a bankruptcy attorney to determine if it is a good option for you.