FILING CHAPTER 13 BANKRUPTCY

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If you’re feeling weighed down by debt but want a structured way to pay it back while protecting your assets, Chapter 13 bankruptcy might be the solution you’re looking for. At Henderson Bankruptcy Law, we’re here to break down what Chapter 13 means, how it works, and whether it’s the right path for you.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, often called a “wage earner’s plan,” allows you to create a repayment plan to pay back all or part of your debts over a period of three to five years. This type of bankruptcy is ideal for those who have a regular income and want to keep their property, such as a home or car, while catching up on missed payments and managing debt. Unlike Chapter 7, Chapter 13 doesn’t involve liquidating assets; instead, it restructures your debt so that it’s more manageable.

How Does Chapter 13 Work?

Here’s what to expect with the Chapter 13 process:

1. Filing a Petition: Like Chapter 7, Chapter 13 begins with filing a petition with the bankruptcy court, along with detailed information about your income, expenses, assets, and debts.

2. Automatic Stay: Filing triggers an automatic stay, stopping collection efforts from creditors, including foreclosures and repossessions.

3. Repayment Plan Creation: You’ll propose a repayment plan that outlines how you’ll pay back your creditors over three to five years. This plan must be approved by the court.

4. Plan Approval: A hearing called a “confirmation hearing” will be held where the court and creditors review and approve your repayment plan.

5. Making Payments: You’ll make regular payments to a bankruptcy trustee, who distributes the funds to your creditors as outlined in the plan.

6. Debt Discharge: Once you complete your repayment plan, any remaining eligible debts may be discharged, freeing you from those financial obligations.

Eligibility for Chapter 13

To qualify for Chapter 13, you need to meet certain criteria:

- Regular Income: You must have a steady source of income that allows you to make monthly payments under a repayment plan.

- Debt Limits: Your secured and unsecured debts must fall within certain limits set by federal law.

- Counseling Requirement: You must complete a credit counseling course from an approved provider within 180 days before filing.

- Prior Filings: You cannot have had a bankruptcy petition dismissed within the previous 180 days under specific circumstances.

What Types of Debt Are Included?

Chapter 13 can help you address a variety of debts, including:

- Secured Debts: Such as mortgage arrears and car loans. You can catch up on missed payments over the repayment period.

- Unsecured Debts: Such as credit cards and medical bills. These may be partially paid off through the plan, with the remaining balance potentially discharged at the end.

Secured vs. Unsecured Debt

Understanding how secured and unsecured debt is treated is important:

- Secured Debt: Tied to an asset, like a house or vehicle. Chapter 13 helps you maintain ownership while catching up on missed payments or reorganizing the debt.

- Unsecured Debt: Not tied to any collateral, like credit card debt or medical bills. These debts are often included in the repayment plan and can be discharged after the plan is completed.

Is Chapter 13 Right for You?

Chapter 13 bankruptcy can be an excellent option for those who have a steady income and need a structured way to manage their debt while keeping important assets. It provides time to catch up on overdue payments and can even help prevent foreclosure or repossession.

Navigating the process of Chapter 13 can be complex, and having a skilled attorney is essential to ensuring your repayment plan is realistic, beneficial, and approved by the court. At Henderson Bankruptcy Law, we have the experience to guide you every step of the way, protecting your interests and helping you regain financial stability.

If you’re ready to explore how Chapter 13 bankruptcy can help you reclaim control over your finances, contact Henderson Bankruptcy Law today to schedule your free initial consultation.