What Does It Mean to File Bankruptcy Chapter 13?
Because of unemployment, growing medical expenses, credit card debt, marital issues, or other reasons, many people are struggling financially. Regardless of the filing chapter, a bankruptcy filing will affect your credit score. It will stay on your credit report for several years and affect your ability to get credit after bankruptcy.
Despite these things, however, filing bankruptcy can make your life less stressful through the automatic stay. A bankruptcy filing can help you pursue debt settlement, as long as you make the right steps and take everything seriously.
If you are currently encountering grave financial difficulties, it is best to seek legal advice early on. Consider all of your options, including negotiating directly with the debt collector or creditor or filing for bankruptcy. A trusted Portland OR bankruptcy attorney can explain the pros and cons of your legal options and how you can pay off your debts.
Bankruptcies can be quite confusing. This article aims to discuss the different types of bankruptcies, specifically Chapter 13. It is composed of the following sections:
- Choosing from the Different Bankruptcy Proceedings
- How a Petition for Bankruptcy Can Help
- Overview of the Chapter 7 Bankruptcy Procedure
- Overview of a Chapter 13 Bankruptcy Case
- The Need for Legal Services of a Reliable Local Attorney
- Contact our Oregon Bankruptcy Law Office
Choosing from the Different Bankruptcy Proceedings
One must remember that the different types of bankruptcy are suited for different filers, depending on their obligations, resources, and short- and long-term goals. The choice is crucial, as there are mistakes that could lead to grave consequences.
Generally, a Chapter 7 liquidation is ideal for those dealing with credit card bills, medical bills, and personal loans. A Chapter 13 reorganization, meanwhile, is usually appropriate for those with assets that they would want to keep.
If you require debt relief and intend to file bankruptcy Chapter 7, a trustee will liquidate your non-exempt assets to pay off priority lenders. However, you must first pass the bankruptcy means test to be qualified to file bankruptcy under this chapter. Under relevant bankruptcy laws, your monthly income and living expenses will determine your eligibility as a filer.
Meanwhile, in a Chapter 13 bankruptcy, you will have the chance to restructure your overwhelming debts and bring current payments for secured debts (those with collateral). You can essentially avoid foreclosure and repossession by proposing a payment plan to the bankruptcy court. Here, the debt repayment plan will run for three or five years.
How a Petition for Bankruptcy Can Help
As mentioned, declaring bankruptcy can gravely affect one’s credit report. Getting new credit can be pretty tricky, both during and after the entire bankruptcy process. Despite this, however, one would be able to notice a slow but steady recovery in their credit score several months after filing a bankruptcy petition.
Depending on the specific circumstance of the bankrupt individual, filing for bankruptcy can help stop foreclosure, stop repossession, and stop wage garnishment. Dealing with debt can be very difficult, and filing for bankruptcy may be the best way for you to rebuild your financial future. It may not be the easiest route, but it may be your best option.
The automatic stay
Most bankrupt filers seek to benefit from the bankruptcy protection that comes with their case. An automatic stay ensures that creditors will not sue debtors for failure to pay back what they owe. It can also stop creditor harassment and wage garnishment, which is very useful for those struggling with debt. An automatic stay generally takes effect once the relevant bankruptcy court has approved the petition.
Under the bankruptcy code, an unsecured debt generally pertains to debt without any collateral. Credit card bills, medical bills, personal debts, and other unsecured debts may be forgiven. This is particularly after the petition is finalized or after the payment plan is completed.
It must be noted, however, that certain types of debt do not involve collateral but are considered non-dischargeable. Common examples include particular tax debt, criminal fines and penalties, child support, alimony, and student loan debt.
While not all of your debt problems will be eliminated when you file bankruptcy, it can help you eliminate certain forms of debt and free up a sufficient budget for you to pay back non-dischargeable debts.
In many cases, the best option to deal with overwhelming unsecured and secured debts is to file for bankruptcy. Experienced and hands-on Portland, Oregon bankruptcy lawyers can explain these advantages of a bankruptcy declaration in more detail.
Overview of the Chapter 7 Bankruptcy Procedure
If you are planning to file bankruptcy under Chapter 7, you must first meet the following qualifications:
- Not having a recently filed Chapter 7 or Chapter 13 petition in bankruptcy
- Not having filed a previous bankruptcy petition that has been denied due to non-compliance with a bankruptcy court order or failure to appear in court
- Passing the bankruptcy means test, which takes into account monthly income and living expenses, among other things
If you are facing financial difficulties and mounting debt, seek legal assistance from a seasoned bankruptcy attorney who can help you with the following steps:
- A certified nonprofit credit counseling provider will facilitate required counseling sessions.
- The assigned trustee in bankruptcy filings will take care of liquidating assets and distributing funds accordingly unless it is a ‘no asset’ case.
- A filer must complete a financial education course from a certified credit counseling organization before obtaining a bankruptcy discharge.
- The bankruptcy court will give out a court order for discharged debts around three to six months after filing bankruptcy. Here, all qualifying debts are forgiven or wiped out.
Overview of a Chapter 13 Bankruptcy Case
A bankruptcy case will involve numerous paperwork and supporting documents. These would include court forms and documentation that must be complete and comply with relevant bankruptcy rules. Also known as a wage earner bankruptcy, Chapter 13 is generally helpful if you are a high-income earner who wishes to reorganize your debts.
If you are planning to declare bankruptcy under Chapter 13, you would generally go through the following steps:
- Consult with a credit counselor discuss finances and debt reorganization plans with a local attorney, who shall help you document your eligibility
- Work with your bankruptcy trustee, to be allowed by the court to repay secured and unsecured debts while retaining your assets
- Formally submit your bankruptcy petition to be able to benefit from the automatic stay
- Submit your proposed payment plan 14 days after filing the petition and work on making payments within 30 days from filing, even before it has been approved by the bankruptcy court
- Go through the confirmation hearing and complete the required debtor education course
In this type of bankruptcy, you can keep all of your properties and assets, but you must pay back your creditors for non-exempt assets through a debt repayment plan. This will run for three to five years. As such, bankrupt individuals who are filing Chapter 13 bankruptcy cases must have a steady income to repay their debts.
The Need for Legal Services of a Reliable Local Attorney
Filing bankruptcy is a legal option for people to get out of debt and gain financial freedom once again. It enabled a lot of individuals to have a fresh start in life, letting you have a clean slate in terms of your finances. However, it is essential to seek bankruptcy information and legal representation from trusted professionals.
If you are planning to file bankruptcy, or are wondering if it is the best course of action to take, you need a lawyer who can help you solve your financial problems. Bankruptcy attorneys will help document your eligibility to a bankruptcy trustee, who will then administer proceedings brought to court. Bankruptcy attorneys with extensive experience in handling bankruptcy cases can provide quality legal advice on how you can get back on track. Discuss your finances and debt reorganization plans, if any.
Contact our Portland Bankruptcy Law Office
If your income and other financial circumstances make it almost impossible for you to pay back debts, filing for bankruptcy may be your only choice. Here, a competent Portland bankruptcy law firm can help. Consult with a dedicated Oregon bankruptcy lawyer at Northwest Debt Relief Law Firm today.