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Talking About Filing Bankruptcy


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Talking About Filing Bankruptcy

Hi, I’m Vera Poluccio. When I was going through my divorce, I spent way too much on my credit cards to support the lifestyle I was used to. When the reality of my finances set in, I was unable to recover from the credit card payments. As I slipped into a financial hole, I had to research various ways to avoid bankruptcy. Unfortunately, I was unable to avoid this inevitability, so I hired a bankruptcy attorney to walk me through the process. The attorney was able to help me discharge my debts and start off with a clean slate. My site will cover all aspects of the bankruptcy process. Thank you.

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What Will Your Chapter 13 Plan Look Like?

Anyone using Chapter 13 bankruptcy law to restructure their debts must present the court with a payment plan. Depending on the types of debts you may have, this could cover a lot of legal territory. You likely have some questions about what a Chapter 13 bankruptcy plan will look like. Here are 5 things that typically show up in these plans.

Timeframe

Most Chapter 13 plans will be set up to last three years. A few may go as long as 5 years, but the court has broad discretion to determine whether the petitioner needs the extra time. However, the term is usually based on how your monthly income relates to the median income in your state.

A Haircut for the Creditors

With unsecured debts, meaning ones that a creditor can't repossess, the debtor may ask the court to force the creditors to accept less than they're owed. This amount may range anywhere from 0 to 100 percent of what they're owed.

Proof of Ability to Pay

Notably, you will have to prove that you have the income needed to pay the reduced amount. You'll likely have to document your financial situation based on a couple of years of tax returns, recent pay stubs, printed bills, living expenses, and a list of your outstanding debts.

Any remaining disposable income should be directed toward making payments. The court will appoint a trustee to represent the creditor's interests. If this trustee raises questions about your payment plan with the court, it may imperil your efforts. Outcomes may include the judge rejecting the petition entirely, restructuring the plan significantly, or in extreme cases, charging the petitioner with fraud.

Arrearages

If you want to hold onto any property that's considered secured debt, such as a home or an auto loan, arrearages must be paid. Any amount that was outstanding before the debts were restructured will have to be paid in full by the end of the plan's term. Likewise, current payments under the plan must be paid regularly.

Meeting of the Creditors

Creditors will have a chance to present their concerns at a meeting. You may be placed under oath and asked questions about anything that ought to be in the plan. The trustee will then relay any concerns about the plan to the court, but the judge will have the final say on approving or rejecting it.

To learn more, contact a resource like C. Taylor Crockett, P.C.