Chapter 13 bankruptcy: How it works?

Chapter 13 bankruptcy: How it works?

Filing for chapter 13 bankruptcy is an option available to individuals who are facing unmanageable debt. It allows debtors to retire their debts in a three-to-five year repayment plan, based on their disposable income and current monthly income. Many people turn to Chapter 13 for relief, as it allows them to keep their property while also avoiding foreclosure or repossession. In order to qualify for Chapter 13 bankruptcy, you must meet certain criteria such as having a regular source of income and not exceeding the maximum allowed income level.

Here’s a step-by-step guide to help you understand how this process works:

1. Consult with a Bankruptcy Attorney

Before proceeding with filing for Chapter 13 bankruptcy, you should consult with an experienced bankruptcy attorney, as Law Offices of Mark L. Miller in San Diego is, to better understand your rights under the law. An experienced attorney can explain the pros and cons of filing for Chapter 13 bankruptcy and provide you with guidance on the best way to proceed.

2. Prepare Bankruptcy Forms

After consulting with an attorney, you’ll need to complete various forms indicating your financial situation and debts. This information will be used to develop a repayment plan that is tailored to your individual circumstances.

3. File Petition

Once all of the required paperwork has been completed, it must be submitted by mail or in person to the appropriate court. The court will review the petition and if approved, appoint a trustee who will help manage your repayment plan.

4. Attend Credit Counseling Class

Before filing for chapter 13 bankruptcy, you must attend a credit-counseling class taught by an approved agency. During the class, you’ll learn how to create a budget and manage your finances responsibly.

5. Submit Repayment Plan

You must then submit a repayment plan that takes into account both your income and expenses. The repayment plan should be structured in such a way that the debts can be repaid within three-to-five years (unless the court approves an extension of this length). Once the repayment plan is approved by the court, all creditors must abide by its terms.

6. Make Payments

After submitting a repayment plan, it’s important that you make payments on time each month as outlined in the agreement; otherwise, it could affect your chances of obtaining debt relief under Chapter 13 bankruptcy.

7. Receive Discharge

Once the repayment plan has been completed and all debts have been paid, the court will issue a discharge of the remaining debt. This discharge is generally effective 60 days after completion of the repayment plan.

Filing for Chapter 13 bankruptcy can be a complex process; however, with the help of an experienced attorney, you can better understand your rights and the options available to achieve debt relief. With patience, diligence, and sound financial planning, it’s possible to overcome overwhelming debt and get back on solid financial footing.

This article is intended to provide you with a general overview of the Chapter 13 bankruptcy process. For more specific questions regarding your individual circumstances, please consult an experienced and knowledgeable bankruptcy attorney. With their help, you can better understand the options available and make informed decisions about how to achieve debt relief. Good luck!


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