Filing for a chapter 13 bankruptcy petition offers you a soft landing when you have creditors breathing down our neck. With the help of a credible lawyer, you can escape repossession or foreclosure and still get out from under your debt.
Most people have the wrong idea about debt forgiveness, explains a Chapter 13 bankruptcy attorney in Salt Lake City. Some think that they can simply file for bankruptcy when their debts become unmanageable and all will be forgiven. Unfortunately, that is not how things work out. The Law Office of Davis & Jones, P.C. warns that the government has measures in place to keep people from abusing the facility.
You need to remember that despite the government forgiving the debt, your creditors will need to absorb the loses. That said, you must approach the application process with care to get the best results.
Consult a bankruptcy process expert
There a several forms of bankruptcy, all of which aim to provide you with a soft landing when you’re on the path to financial ruin. Each of them has different terms and conditions, as well as results. An attorney will help you file for the right type of bankruptcy, depending on your unique circumstances.
For instance, if you have sufficient income but your creditors are on your neck, you should file for Chapter 13 bankruptcy. It’s a facility for people whose income is large enough to cover their debts, but are facing liquidation. One of the most attractive features of Chapter 13 is that you get to keep your home as long as you are current on your payments.
Work out a repayment plan
If you are cleared for Chapter 13, you will be given three to five years to clear your debts but this puts your disposable income to debt reduction. It means you can catch up on the mortgage while eliminating unsecured debts. A court-appointed trustee will supervise your life for the set period while collecting and distributing your payments.
You will need to submit a reorganization plan to safeguard your assets from foreclosure or repossession while requesting debt forgiveness. You will need to hold no more than $394,725 in unsecured debts, such as personal loans and credit cards. You secured debts such as mortgage, and car loans shouldn’t exceed $1,184,200.
Provide your details
You will incur a total of $310 in filing fees when filing for a Chapter 13, but the attorney fees, which vary from among states, are likely to set you back an average of $2,564. Lawyer fees are expected to go up depending on the complexity of your case. You will need to provide the court with a list of your creditors and the amount of the claim, as well as disclose the amount and source of your income.
You should also list all your properties and leases in your name, as well as a breakdown of your monthly living expenses. The court also needs your tax information and a statement of any back taxes that you owe.
When filing for a Chapter 13 bankruptcy, a judge will hear your case to determine if your repayment plan meets the requirement of the bankruptcy code or if it is fair to your creditors. They will also require you undergo credit counseling within six months of filing a petition. The court will require you to work with a trustee who will collect and pass the payments to your creditor. You are not allowed to miss or make late payments once your payment plan is approved.