Why Chapter 13 Might Be the Best Choice for You

For most people dealing with debt, filing bankruptcy is one solution to give you a fresh start. It is an important decision that you have to think through, considering that there are different types of bankruptcy available for individuals in Maryland. One type of bankruptcy that you can file is a Chapter 13 bankruptcy. When you file for Chapter 13, the court gives you the opportunity to keep your secured loans, or debts secured with collateral such as your house, personal vehicle, and/or other properties, and restructure a repayment plan for your debts. You will be given 3-5 years to repay your secured debts, and during this repayment period, you and your assets will be protected by the federal court. Meaning, your assets cannot be confiscated by debt collectors. By declaring bankruptcy under Chapter 13, the court will allow you to keep your properties that are subject to security interests by making sure that you’ll make the payments required under a long-term repayment plan.

Many people dealing with huge debts usually think of bankruptcy as the solution to avoid foreclosure of their properties and assets. However, bankruptcy laws are more complex than you think. There are certain requirements that you must meet before you can proceed to file for bankruptcy.

For instance, a Chapter 13 bankruptcy is also called a wage earner’s bankruptcy because it requires that the person who plans to declare bankruptcy must have a regular income.

To know if you qualify for filing for bankruptcy Chapter 13, check the list below:

• You must have a regular income
• Your total unsecured debt (debt not backed by collateral) must be below $394, 725
• Your total secured debt ( debt backed by collateral) must not exceed $1, 184, 200
• Your tax filings must be updated
• You haven’t filed a Chapter 13 bankruptcy in the last 2 years
• You haven’t filed a Chapter 7 bankruptcy in the last 4 years
• You haven’t filed a bankruptcy petition that has been dismissed for failure to appear in court or to comply with orders from the court of law

If you don’t qualify for Chapter 13, there are other debt-relief options available. Contact one of our bankruptcy lawyers today for a free debt solution evaluation.

On the other hand, if you qualify for a bankruptcy filing under Chapter 13, you may take the following steps:

1. Consult with a professional bankruptcy attorney from a credible bankruptcy law firm to discuss your financial situation and debt reorganization plan. A bankruptcy lawyer can help you document your eligibility to a bankruptcy trustee, who will administer the proceedings when you file for bankruptcy. The goal in Chapter 13 is to get court approval for your repayment plan both for your unsecured and secured debts while retaining your properties and assets. You’ll also receive a discharge that will eliminate most of your remaining debts.
2. Work on your reorganization plan with a reliable bankruptcy lawyer. Prepare all the necessary forms and paperwork that you need to file, and submit your petition for bankruptcy to a bankruptcy court. That way, the automatic stay will take effect and creditors will be stopped from all collection activities.
3. Propose a repayment plan within 14 days after you have filed a petition and work on your repayments within 30 days, even though your plan is not yet approved.
4. Proceed with the scheduled meeting with your creditors and debt collectors as well as with the confirmation hearing where your repayment plan will be approved by the court. The court often requires those who apply for bankruptcy to undergo a debtor education seminar during the bankruptcy process.

There are different types of bankruptcy to choose from, with the most common being Chapter 13 and Chapter 7. A Chapter 13 bankruptcy filing takes longer than a Chapter 7, which can cover your debts such as credit card bills, medical expenses, and personal loans. Although Chapter 13 stays on credit reports for 7 years from your filing date, your credit scores can still be eventually improved. With the right bankruptcy attorney as your partner, your credit scores can be given a new foundation for it to grow and give you a fresh start in life.

If you are planning to file for bankruptcy and you want to know if Chapter 13 suits your current financial situation, consider the following:

• You want to keep certain assets and properties, but you are late on your due payments and mortgage and you want to make these current.
• Your debts include student loans, child support, or other recent taxes that can’t be discharged by a Chapter 7 bankruptcy, but paying for your other debts could help wipe-off these other debts.
• You have a co-signer whom you want to be protected while you pay off what you owe and clear the co-signed debt.

How We Can Help

Filing for bankruptcy can be both confusing and overwhelming, and reaching out to an experienced bankruptcy lawyer can help you get familiar with the bankruptcy process and personal bankruptcy applications.

If you’re interested to know more about the bankruptcy filing, contact our Towson bankruptcy attorneys today at Grafton Firm, LLC. Call (410) 505-0414 for a free consultation and debt solution evaluation.