The bankruptcy filing allows a debtor to have a fresh start. Deciding on the right bankruptcy option, how to file, and understand the bankruptcy law is important if you are considering bankruptcy. Consulting with experienced Towson bankruptcy attorneys is advisable especially if it is your first time filing bankruptcy.

When you file for bankruptcy, you must keep in mind that you have responsibilities and bankruptcy rules follow. If you want to keep your assets while paying your creditors, Chapter 13 bankruptcy is the best choice for you.

Chapter 13 Bankruptcy

In Chapter 13 or reorganization bankruptcy, a trustee in bankruptcy will be assigned for your bankruptcy case. You will pay through the bankruptcy trustee and the trustee will allocate the funds to the creditors, who receive an amount depending on the sums paid out by your payment plan.

The bankruptcy trustee cannot sell assets. Instead, you need to pay your unsecured creditor at least the amount of your nonexempt asset through your payment plan in return for being able to keep your properties. 

Disposable Income

File Bankruptcy Chapter 13In your repayment plan, you should agree to pay back any remaining disposable income (what’s left of your salary after subtracting permitted living expenses and payments on secured loans, like mortgage or auto loan) towards unsecured debts. Unsecured debts include credit card bills, medical bills, and student loan debt.

Duration of the Repayment Plan

The duration is determined by your monthly income. The payment plan may last up to 5 years if your income is higher than the median income of the state. You may negotiate a three-year payment plan if your monthly income is not more than the median income. A Towson bankruptcy lawyer can help you come up with a suitable repayment plan.

There Will Be No Property to Be Surrendered

Exemptions allow anyone who files a petition for bankruptcy to protect the same amount of assets. Even then, you will not have to give up any properties if you filed for bankruptcy Chapter 13. However, this does not imply that you will be able to hold more property than anyone who filed Chapter 7 bankruptcy. You would also pay for it.

Unsecured Creditor

The one who owns the unsecured loan is referred to as an unsecured creditor. Unsecured debts, unlike secured debts, are not backed by collateral that a creditor may seize if you do not make the payment. Common examples of unsecured debts are medical bills, credit card bills, personal loans, and utility bills.

If you fail to repay these debts, the creditor will not be able to compel you to give up your asset, at least not without doing anything else. Before actually taking unfavorable collection actions against you, such as wage garnishment, the majority of unsecured creditors must first file a claim and obtain a judgment in the bankruptcy court. You will not have to think about collection strategies until you are served with a lawsuit, and filing for bankruptcy would wipe out the majority of these types of debts.

Priority Unsecured Creditors Will Be Able to Use Other Collection Methods

Income taxes that are past due and student loan payments backed by the government are still unsecured loans, so they are subject to special laws that enable creditors to take legal action against you without going to court. It also includes child support and spousal care responsibilities. These creditors have priority claims that will not be discharged by filing bankruptcy. Your repayment plan would require you to pay back the full amount of these debts.

Secured credit cards

Not every credit card account is unsecured. When buying any appliance, electronics, or jewelry, carefully read the contract. You will almost agree to give the creditor a security interest in the purchased property if you sign the agreement. If you fall behind your payments, the creditor can seize your properties. If you declare bankruptcy, you would be able to repay the debt and retain the asset using bankruptcy Chapter 13. If you can reduce the amount you are owed, you may be able to pay less.

Seek legal advice with Towson bankruptcy attorneys

Trusted bankruptcy lawyers will assist you throughout the bankruptcy process. It is important to seek legal help from someone knowledgeable of bankruptcy laws. A credible Towson bankruptcy attorney will help you have a successful bankruptcy proceeding.

Contact our trusted Towson bankruptcy attorneys at Grafton Firm, LLC for a free consultation.