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Chapter 13 Bankruptcy is an adjustment of debt or money owed to creditors through a repayment plan.

This form of bankruptcy is also known as a “wage earner’s plan.” This plan permits a person who has a stable income to come up with a way to feasibly repay their debts. A chapter 13 bankruptcy offers the person in debt to make payments to their creditors over a period of three to five years to pay off balances due.

Seeking sound advice from an experienced and knowledgeable bankruptcy attorney can help you navigate the process and safeguard your interests.

Advantages of a Chapter 13 Bankruptcy
One of the biggest advantages of a Chapter 13 bankruptcy is that it gives debtors the chance to protect their home from any pending foreclosure action. As opposed to the chapter 7 bankruptcy which offers liquidation of all assets. A person can halt any foreclosure actions as well alleviate any past due mortgage payments over a set time.

Another great advantage to the chapter 13 bankruptcy is that any secured debt can be rescheduled and spread out through the course of the chapter 13 plan. (This is secured debt owed other than the mortgage on their main place of residence). Third parties are also protected under a specific stipulation for debtors who are liable to them on any “consumer debts” that are owed.

Who Can file a Chapter 13 Bankruptcy?
Any person who is employed, self-employed, or running an unincorporated business can be eligible to file a chapter 13 plan so long as their total unsecured debt is not more than $394.725 and any secured debt is not more than $1,184,200. Corporations or partnerships are not eligible to file for a chapter 13.

A person is not able to file a chapter 13 (or any chapter of bankruptcy) if there has been a previous bankruptcy petition that was discharged within the prior 180 days for the debtor’s deliberate failure to show up for court, or to conform to the instructions given by the court; or the petition was discharged because the creditors gained relief by recovering the property the debt was owed for because of a lien.

How the Chapter 13 Bankruptcy works?
The first step in filing a chapter 13 is to file the bankruptcy petition within the are the debtor maintains primary residency. It is essential that the debtor lists all the following information on their petition for bankruptcy for the court to be able to make a consideration regarding the petition:

A listing of all assets and liabilities
Their current income and expenses
A current timetable for all executed contracts and any leases that remain in effect
And a current financial statement
A current certificate of credit counseling is also required to be filed along with the chapter 13 petition; as well as any repayment plans that have been set up as a result of the credit counseling sessions.
Verification of any payment made through wage garnishment

All of this must be received at least 60 prior to the date of filing the petition. There will also need to be a statement of the person’s net monthly income; as well as any increases in income—cost of living raises or hourly wage advancements.

Once the court receives a petition for a chapter 13, the debtor then has 14 days to file the repayment plan. This plan is required to be provided to the court in order for the payments to be given court approval. These payments need to be fixed amounts that can be given to the trustee on a weekly, semi-monthly, or monthly basis and the trustee then disperses the payments to the creditors corresponding to the conditions of the repayment plan.

The chapter 13 bankruptcy plan can work well for a debtor as long as they are able to make their payments to the trustee in a timely manner. These payments can be set up through payroll deduction to ensure they are made on time; however, should a payment be missed, the court can discharge the case and move on with the liquidation orders required in a chapter 7 bankruptcy.

If financial debt is making it challenging to manage your expenses personal bankruptcy may be an option for you. The bankruptcy attorneys at Border Law serving Southfield and beyond has the experience and knowledge to help. Our goal is to use our 15 years of knowledge and expertise to provide a stress free and smooth experience for the individual or business facing bankruptcy. We can pave the way for debt relief and help you get the fresh start you deserve.

The Law Offices of Brett Border PLLC provides comprehensive legal services specializing in personal and corporate bankruptcy, and more. Call us today for a Free Case Evaluation!