More often than not, people end up acquiring more debt than they can repay. This may not be intentional. Circumstances in life, such as job loss or illnesses, can prevent someone from paying their debts on time. If you are in a similar situation, you should meet a los angeles chapter 13 bankruptcy attorney to check whether you can benefit from the option. Contrary to popular belief, bankruptcy doesn’t mean you have to lose everything. At times, this could mean having a clean or better slate to restart your life. In this post, let’s discuss Chapter 13 bankruptcy in detail.
What is Chapter 13 bankruptcy?
With Chapter 13 bankruptcy, you have a repayment plan that allows you to repay your dues and debts. Typically, people pay only a part of the outstanding debts to the creditors. Chapter 13 bankruptcy is only available for individuals and sole proprietors and not to businesses.
As stated above, Chapter 13 allows you to have a payment plan, which usually has a period of 36 or 60 months. If your gross income is less than the state median income, you will usually have a 36-month plan. On the other hand, when you earn more than the median income, you have a 60-month payment plan. Your attorney is responsible for proposing the repayment terms to the court, which will include all relevant details, such as the amount or part of the debts you can pay and the time required to pay the proposed amount. If the court approves the case, you will have to make the first payment within 30 days. The payment is made to a trustee who is in charge of distributing respective shares to the creditors.
What will be the monthly payment amount?
The monthly payment amount in Chapter 13 bankruptcy is based on certain factors, such as your disposable income. The disposable income refers to your income minus the standard deductions for food, housing, and utilities. The Chapter 13 bankruptcy plan should also outline the priority debts, which must be paid first, such as income taxes, child support, and alimony. The best interest of creditors is also another factor, which your attorney can explain. If you adhere to the repayment plan and discharge the debts accordingly, the debt that you didn’t pay will be discharged. In other words, you are not responsible or liable for these debts.
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Should you consider Chapter 13 bankruptcy?
Chapter 13 bankruptcy may be beneficial for many individuals, depending on the circumstances. You get to keep your home and car with the possibility of lower payments. The fee of your attorney will be paid using a payment plan, which means you can save on upfront costs. You can also get relief from wage garnishment and don’t have to deal with those debt collection calls anymore. Your tax debts and payments for child support and alimony can be paid in a planned way.
However, there are a few other things to consider. If you fail to keep up with the payment, your Chapter 13 bankruptcy case could be dismissed. You must complete all plan payments to discharge the remaining debts. Also, Chapter 13 doesn’t get rid of certain debts, including alimony, child support, due taxes, and student loans. The Chapter 13 bankruptcy will appear on your credit for as long as ten years, which can have financial implications.
Get a Chapter 13 bankruptcy attorney
A competent attorney can answer all your Chapter 13 bankruptcy questions and offer valuable and tailored advice for your situation. They will also represent you in court and ensure you have legal support. The lawyer will also take care of the complex paperwork.
Meet an attorney today to learn more.
