Chapter 13 Bankruptcy is more complicated than a Chapter 7 Bankruptcy, however, the basic steps are the same. The debtor is still required to file a petition for relief with the court along with following the corresponding schedules. The debtor must also attend the Meeting of Creditors, similar to a Chapter 7 filing. One important step that differentiates the two types of bankruptcy filings is the requirement of filing a court-approved repayment plan.
In order to enter a Chapter 13 bankruptcy, the debtor must propose a plan to the court stating how he/she is planning to reorganize his/her financial situation. If the court decides the debtor has proposed the plan in good faith and will successfully be able to follow through with the plan, then the plan will be confirmed and the bankruptcy process will be close to complete.
It is important to remember that with a Chapter 13 filing the debtor must have sufficient income in order for the repayment plan to be approved by the court. Unlike a Chapter 7 bankruptcy, which potentially requires an individual to relinquish property and assets to eliminate debt, a Chapter 13 bankruptcy permits a debtor to keep property and assets while repaying their debts through the repayment plan.
During a typical Chapter 13 proceeding, an individual with consistent income would present the bankruptcy court with a written plan, under which, payment terms of his/her debts would be extended between 3-5 years, depending on the debtor’s income. In many cases, the debtor pays only a fraction of the total debt incurred, provided the debtor’s disposable income is insufficient to pay off the total debt.
Once the debtor successfully completes the payment schedule in the proposed plan, he/she will be discharged from their dischargeable debts. Making the decision to filing bankruptcy can be difficult, and deciding which type you should file can be even more discerning. Having a qualified bankruptcy attorney from the Law Office of Brian R. Lewis on your side can help. Contact us today for your free initial consultation.
