Chapter 13 BankruptcyIn Washington D.C., Maryland, and Virginia combined, over 16,000 individuals filed for bankruptcy in 2011. Their goal was to reestablish their financial well being. The first step they took was to hire a bankruptcy attorney–and yours should be too.
Chapter 13 generally provides a way for a debtor with regular income to repay all or part of their debts. Any individual or self-employed person operating an unincorporated business can file for Chapter 13 bankruptcy, provided he or she has less than $360,475 in unsecured debt and $1,081,400 in secured debt. The law requires that a petitioner complete credit counseling in the previous 180 days before filing for bankruptcy as well.
Many documents are required to file bankruptcy, including:
Within 14 days of filing for bankruptcy, the petitioner must submit a repayment plan that details how he or she will pay off creditors. The bankruptcy trustee and creditors examine this plan and the petitioner’s finances. Approximately 100 days after the filing date, the bankruptcy judge holds a hearing where he or she either confirms or denies the petitioner’s plan.
Generally, the standard is that the repayment plan must devote all of the debtor’s disposable income – income after paying essential living expenses – to the repayment of debts for the term of the plan. Filing a Chapter 13 bankruptcy automatically stops most collection actions against the debtor or the debtor’s property, including foreclosures and repossessions. It also stops creditors from going after any co-signers for the debt.
There are three types of debts in bankruptcy — priority, secured and unsecured. Priority debts, like taxes, child support and the costs of the bankruptcy, must be paid in full. Secured debts include those where a creditor can reclaim collateral from the debtor if he or she does not pay. Under Chapter 13 bankruptcy, the debtor may keep the collateral if he or she pays the value of the collateral or in some cases, the full value of the debt.
If the debtor uses all disposable income to make repayments, then any unsecured debt generally does not have to be paid in full. After the plan ends, the remaining unsecured debts usually are forgiven. Those wishing to file Chapter 13 should talk to an attorney about these various types of debts and which repayment rules apply.
You can begin rebuilding your credit immediately after filing bankruptcy. The first step is to make the plan’s required payments over the term of the plan. Secured credit cards, where the company holds money from the cardholder as collateral, can be used to begin building a positive credit history. It’s also important to pay all bills on time, including rent, utilities, credit card bills and more.
Law offices Of Ammerman & Goldberg has over 50 years of experience helping individuals file for bankruptcy relief. Contact our office in Washington, DC to set up a consultation with a lawyer regarding your bankruptcy options.