What are the rules for filing for Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that those who have assets that they do not want to dispose of or otherwise loose can turn to. Chapter 13 bankruptcy requires that a certain portion of the current debt to retired over an agreed upon period of time. People who are gainfully employed and have non-exempt property that they don’t want to lose will usually hire a Chapter 13 bankruptcy lawyer in Fredericksburg, VA.
A lawyer is important to those filing for Chapter 13 as it requires the development of and the presentation of a re-payment plan that is satisfactory to the existing creditors as well as the court. There are very strict rules that must be followed to the letter when declaring the type of bankruptcy; the debtor must show evidence that they are in a position to pay off the debt monthly, they must agree to credit counseling and they must prove that the level of both secured and unsecured debt are not in excess of the maximum legal limit allowed for Chapter 13.
Before even filing for bankruptcy the debtor must agree to credit counseling. This counseling will let the debtor know what to expect as the bankruptcy process proceeds and it also will be used a test to determine if the debtor is even eligible to declare Chapter 13. To be eligible the debtor must be employed or sole proprietors of a business that pays them enough to make agreed upon monthly payments. The rules that apply to Chapter 13 bankruptcy set tight limits on both the amount of secured debt as well as unsecured debt.
If the debtor is found to be a candidate for declaring Chapter 13 bankruptcy, the debtor and his or her Chapter 13 bankruptcy lawyer in Fredericksburg, VA will develop and submit a petition to declare to the court that they intend to file for this Chapter. The rules that currently apply state that certain documents must be attached to the petition, these include a statement of assets and liabilities, statements of income, the names of all creditors, both secured and unsecured. Along with these documents the petitioner must supply a list of all his or her monthly expenses. With this financial data available the amount of money available to repay the creditors can be calculated.
The proposed repayment plan needs to be approved by the court appointed trustee, all the involved creditors and the court. Once agreement is reached payments can begin, these payments are made to the trustee every month for no more than five years at which time the debts will be paid off. For more information, visit the website.