Bankruptcy is a legal process that many people turn to when they need financial help with debt problems. If you compare the two main branches, you might discover that Chapter 13 is the right branch for you. You may also find that Chapter 13 is the only branch you qualify for when you need debt help. If you decide to use this branch, it might help to know a few things about how it works. Here are three vital things to know about a Chapter 13 bankruptcy plan.
It Is the Wage-Earners Plan
Lawyers and bankruptcy courts may refer to Chapter 13 as the "wage-earners" plan. It has this title because people who use it must have a steady income and earn enough income. If you do not earn a lot of money, you cannot use Chapter 13. You must pass an income test to use it, and there is a reason this is an eligibility requirement. A Chapter 13 plan requires debt repayment. You cannot repay your debt if you do not earn enough money. Therefore, your lawyer will closely examine your income to ensure that you earn enough to qualify for this branch.
The Repayment Plan Details
The second essential thing to understand is the repayment plan. If you use this branch, you must repay your debts. You might not have to repay off all of your debts, but you will likely repay most of them. Your lawyer will evaluate your income and debts to create a repayment plan. Once created, your lawyer will present it to the court for approval. The plan might require paying the court once or twice a month. They take this money and pay off your bills with it. You will have enough money left each month to pay for your extra expenses not covered in the plan. This plan can last around three or five years, depending on your financial state when you began.
The End of the Plan
If you make every payment for your plan, you will eventually reach the end of your Chapter 13 case. At that point, the court might discharge some of your remaining debts. When you complete the plan, you can stop making the payments to the court, and you should be in a better financial position.
Chapter 13 works well for many people, but it does not offer debt relief overnight. It takes time. If you are interested in learning more about it, contact a bankruptcy law firm.
Share6 October 2020
If your mountain of debt has grown so tremendous that you can't imagine a way out, then you need to contact a bankruptcy attorney. Even though filing bankruptcy can seem like cheating, it is sometimes the only option when you have consumer or medical debt that is consuming your paycheck and then being left unpaid. An attorney can take a look at your finances and recommend a pathway out of debt utilizing one of the several types of bankruptcy available. Learning more about this process can make it seem more approachable. Dig into the articles on this website to get started with that learning.
