If you are considering Chapter 13 bankruptcy, you probably have a lot of questions and concerns. In reality, for those who are committed to success, declaring bankruptcy can be the first step in the right direction.
Chapter 13 bankruptcy is the recommended course of action for individuals who need relief from creditors. It allows the individual to restructure debt under the guidance of the bankruptcy court. With chapter 13 bankruptcy, debt is reorganized or restructured, protecting your assets against repossessions or foreclosure.
A Chapter 13 debt plan lasts 3 to 5 years. During this period, the debtor makes regular payment to a trustee who handles repayment for car loans, mortgages, back taxes and child support. At the same time, interest and penalty fees cannot accumulate , and it can stop foreclosure on your home.
The ultimate goal is to complete the Chapter 13 plan accordingly, have the bankruptcy discharged and ensure that qualifying debt is wiped out.
Filing for bankruptcy is always a stressful time. That’s why we have provided seven pieces of advice for successfully getting back on track.
1. Create a Support Network.
Having solid support can help you survive Chapter 13 bankruptcy. One of the best ways to secure your future is to seek out a financial advisor and hire an experienced bankruptcy lawyer. Reliable professionals can help you prepare for each step of the process and get successfully released from bankruptcy.
2. Pay Attention to the Paperwork.
Filing for bankruptcy requires a lot of paperwork. To get started, you will need income tax returns, bank statements, paystubs and all other pertinent financial records. The documents filed to declare bankruptcy are about 50 pages long. It’s crucial that each page is completed honestly, accurately, and thoroughly. Our firm has a dedicated team of staff to help walk you through obtaining the documentation that we need and to provide assistance every step of the way.
3. Stick to a Budget.
To follow a Chapter 13 plan, you will need to carefully budget expenses and cut out the extras. Monthly payments due to the bankruptcy trustee are calculated by subtracting costs from your expected income. Your attorney will work to provide some flexibility in the repayment plan to help you cover unexpected costs. But the fact remains, that for the bankruptcy period, you will have to stick to a tight budget in order to make repayments on time. Our firm tries to work with you to establish your budget well before your case is filed so that you start your case with the greatest chance for success!
4. Pay the Bills on Time.
Chapter 13 bankruptcy is designed to give you time to get on track with all the payments you owe. This includes child support, alimony, taxes, insurance, as well as house and car payments not included in the Chapter 13 plan. Late payments, getting behind on payments or defaulting on your plan could have severe consequences. This could result in repossession or foreclosure; debts may not be discharged and creditors can begin calling to collect.
5. Stay on Top of Notifications.
It’s important to pay attention to court filings and reports during the entire bankruptcy period. Things may change over time and your case isn’t resolved until your Chapter 13 plan has been confirmed.
Letters from Creditors
Creditors are not supposed to contact you once you have filed for Chapter 13 bankruptcy. They are required to respect an automatic stay. This means that any letters or communications you receive from creditors during this time may be in violation of the order. Let your lawyer know if you are contacted by creditors so that the appropriate action can be taken.
Proofs of Claims
Within 90 days of meeting with creditors, you should receive their proof of claims. If inaccurate, these claims can be disputed. Your bankruptcy lawyer can help you file the proper paperwork.
The bankruptcy trustee will regularly send statements. Check these reports to see that creditors’ claims debt match the amount disclosed in the Chapter 13 plan and that these amounts don’t increase. Contact your bankruptcy attorney if you spot any inconsistencies.
During the bankruptcy period, you may receive letters about issues with your Chapter 13 paperwork, creditor disputes, or legal motions filed. Your bankruptcy attorney should be informed about all legal notifications. Keep in mind that court documents generally have stringent deadlines that must be met.
6. Keep Your Lawyer Up to Date.
In order to survive Chapter 13 bankruptcy, you need to work closely with your attorney. Your lawyer needs to have a clear picture of your finances and situation to help you successfully complete a repayment plan, so be open and honest in your meetings.
Let your lawyer know if your income or expenses have changed. If you have lost your job or are accumulating medical expenses, for example, your attorney can help adjust the plan in order to keep you on track. Do not sell or dispose of any assets without talking to your attorney. The Bankruptcy Court can change your Chapter 13 plan at any time, if needed.
7. Complete Credit Counseling and Debtor Education.
Individuals must successfully complete credit counseling before filing for bankruptcy and a debtor education course before being discharged. These consultations are intended to help you better understand your economic situation and how to obtain financial stability. Debt counselors will assist you in making a realistic plan for managing debt payments and expenses, even after the bankruptcy period. Our firm contracts with course providers for a group rate discount and passes the savings on to you. This also allows our staff to assist our clients in troubleshooting any technological problems that may prevent you from completing your course.
8. Don’t Create New Debt.
In order to get through Chapter 13 bankruptcy, containing and minimizing debt is key. If you must incur new debt during the bankruptcy plan period, you must contact your attorney right away. Failing to obtain court or trustee approval before incurring new debt can result in your case getting dismissed.
For more advice on surviving Chapter 13, read the Top 10 Mistakes Made When Filing Bankruptcy.
Legal Advice that You Can Trust
An experienced bankruptcy attorney will assist you through every step of the process. If you are considering bankruptcy or facing foreclosure, get professional advice. Contact Amourgis & Associates today by calling (330) 535-6650.