Is Filing for Chapter 13 Bankruptcy the Right Debt Relief Solution for You?
Chapter 13 bankruptcy is often more agreeable than Chapter 7 bankruptcy for both debtors and creditors. Instead of attempting to discharge your debts, Chapter 13 bankruptcy will try to reduce the amount you owe and create a new repayment plan that your income and finances can handle. If your debt is not entirely overwhelming or you have assets you do not want to risk, like your home or business, then Chapter 13 is likely the choice you want to use.
At Capital Justice Attorneys, LLP, our Washington, D.C. Chapter 13 bankruptcy lawyers are well-versed in local and federal bankruptcy law. We understand that debt happens to good people; we can provide you with the knowledgeable and compassionate legal counsel you need and deserve.
How Chapter 13 Bankruptcy Works
Chapter 13 bankruptcy may be an ideal debt relief solution for those who do not qualify for Chapter 7 bankruptcy or those who are concerned about losing certain properties and assets that may be liquidated under Chapter 7. Chapter 13 bankruptcy may also work for you if you have debts that cannot be discharged, such as child support payments, and you wish to pay these debts off in three or five years.
Generally speaking, Chapter 13 bankruptcy goes as follows with the assistance of one of our attorneys:
- The debtor first determine that he/she meets all eligibility requirements for filing
- The debtor then provides all required information, including proof of income, list of creditors, etc. when filing
- The debtor attends credit counseling within 180 days of filing his/her petition
- The debtor submits a repayment plan proposing how he/she will repay debts
- A bankruptcy administrator or a judge will typically hold a hearing to rule on the validity of the repayment plan
- Creditors may dispute the repayment plan, but the judge’s ruling will be the final say
- Once the payment plan is accepted, the debtor must make all payments on time; late payments are not allowed, however, the debtor may request modifications to the repayment plan if his/her financial situation changes
Automatic Stays from Bankruptcy Filings
Whether you use Chapter 7 or Chapter 13 bankruptcy, you will gain the protection of an automatic stay as soon as you file. In simple terms, an automatic stay prevents creditors from using their typical methods to pursue a debt, like calling your home, sending you letters, garnishing your wages, etc. Essentially, once you file for bankruptcy, you put an end to creditor harassment.
The automatic stay will only be removed once a court concludes your bankruptcy, but at that point, we hope our Chapter 13 bankruptcy attorneys have helped you eliminate as much of your debt as possible.
Difference Between Chapter 7 and Chapter 13 Bankruptcy
Both Chapter 7 and Chapter 13 bankruptcy allow an individual to break away from debt and start fresh with their finances, but there are some differences. Chapter 7 bankruptcy sells nonexempt property assets and uses it to pay off creditors. This is designed for individuals who passed the means test and who’s income is limited and unable to pay back creditors. Chapter 13 bankruptcy is for those who are not eligible for Chapter 7 but need a debt relief. With chapter 13 you are able to reorganize your debts into monthly payments for a fixed time and then have unsecured debts discharged.
To learn more about how our firm can help you, contact us at (202) 465-0888 for a free, 20-minute phone consultation.