Most individuals who file for bankruptcy protection would do so under Chapter 13 bankruptcy instead of Chapter 7 because of the means test that limits the number of those who are eligible to file for Chapter 7. Chapter 13 bankruptcy is also known as the wage earner’s bankruptcy. Chapter 13 bankruptcy requires you to meet income requirements, too but not pass a means test. You would also need to attend compulsory credit counseling and complete the necessary documents. If you are considering filing for Chapter 13 bankruptcy, read on and discover what you need to do once your petition is granted.
Chapter 13 bankruptcy is where the bankruptcy court draws up a repayment schedule for you to pay off all your debts over a period of time up to 5 years. The bankruptcy court will appoint a bankruptcy trustee who will oversee your case during your repayment period. Your bankruptcy trustee is also the one to whom you repay your debts and he or she will send your payments to your creditors.
Your creditors will be given their respective priorities in receiving payments. Every month, you are to pay off your debts according to the priorities. High priority debts will include your ex-spouse and children who are owed alimony and child support, the IRS who are owed any back taxes and any employee benefit fund to which you are a contributor.
The amount you pay will depend on what creditors are entitled to. Secured debts would normally be paid in full while unsecured debts may be paid in full or in part depending on whether or not you have disposable income to pay toward them, the length of your bankruptcy and the value of nonexempt debt. So some creditors will be paid the entire debt they are owed while other creditors may be paid a smaller percentage or nothing at all.
The main advantage of Chapter 13 bankruptcy over Chapter 7 is that in Chapter 13 bankruptcy you get to keep your assets provided you keep to your repayment plan. All mortgage debts and car loans will be included in your list of debts so you will be paying them off while getting to keep your property and your vehicles.
Finally, the term of your Chapter 13 bankruptcy is dependent upon your income. If you have any questions or would like to file a bankruptcy petition (Chapter 13 or Chapter 7) call us at (813) 200 4133 for a free consultation.