The thought of filing for bankruptcy may intimidate you, especially if you are unsure of how repayment plans typically work.
However, the structure of a Chapter 13 plan is often beneficial for those looking for a new start in life unburdened by debt.
According to FindLaw, Chapter 13 bankruptcy involves an individual, known as a debtor, filing for a repayment plan. No business entities are eligible for this type of plan because you can only file for your own personal debts. Additionally, you must not have filed for Chapter 7 or Chapter 13 bankruptcy and had debts dismissed within the last two years.
Most plans cover a three- to five-year period where you can stagger payments in order to fulfill your promises to creditors. However, the court may not dismiss all your debts under this new plan. You still must pay alimony, tax liens and child support in full.
Requirements for filing
As long as you meet the minimum limit on the amount of money you owe and can verify you have not had a case dismissed in the last 180 days, you may start your plan. Typically, you also must fulfill credit counseling requirements that deal with debt. You need documented proof of this counseling in order to continue with your bankruptcy plan.
A steady income is an important part of your Chapter 13 repayment plan. To prove you will follow through with your plan, you must show the court that you have enough income to pay for your unsecured creditors’ demands and any other expenses that arise. Once you prove this, you may start repaying your debts.