Filing bankruptcy can be an overwhelming experience, but proper understanding and professional guidance can make the process of filing chapter 13 bankruptcy easier. If you are considering filing chapter 13, use this guide to help you go through the process in a financially savvy and successful manner.
It’s Different from Chapter 7
Most consumers are surprised to learn there are different types of bankruptcy. Since chapter 7 is the most common, you may think it is the best option for you. However, learning the differences will help you understand which type of bankruptcy you need to rile.
Chapter 7 requires you to pay off debts by selling a nonexempt property. Exempt assets may include your necessary living expenses, such as a home mortgage or an automobile loan that you will need to get to and from work. Nonexempt property includes unnecessary items of value, such as a second car or home, a boat, or jewelry or coin collections of significant value.
During a chapter 13 bankruptcy, instead of selling any assets to put towards your debt you will pay off creditors in monthly installments. The payments will be made to your bankruptcy trustee, who will then send the payments to creditors on your behalf. Your monthly payment amount will be based on your income. In most cases, you should be able to pay off these debts within 3 to 5 years, depending on your income and your total debt. Once these payments are made, the courts will discharge your remaining debt.
Organization is Key Successful Filing
Before meeting with your attorney, make sure to have all the necessary documents on hand. This will ensure your attorney has everything needed to file the bankruptcy in a successful and legal manner.
Here are a few key documents your attorney will need:
- List of all creditors and information regarding claims, defaults, and late fees
- Income verification and pay statements
- List of property
- List of monthly living expenses, which should include rent/mortgage, utilities, grocery expenses, transportation costs, healthcare coverage, childcare costs, and taxes
If you are filing a joint bankruptcy with your spouse, they must also have the above documents. If filing solely, your spouse will not need to provide any information.
Spending money on court and attorney fees to file bankruptcy may not seem ideal when you are already behind on bills and need to get a better grasp on your finances. However, investing the money in hiring an attorney to sort through your finances and negotiate with your creditors is a smart decision. A misstep in the process could result in a lengthier process and extra fees.
While each case is different, the cost to hire a bankruptcy is a worthwhile investment in your finances and future.
For advice and more information on chapter 13 bankruptcy, contact Collins & Arnove in Plano TX at 972-516-4255.
Collins & Arnove | Chapter 13 Bankruptcy Plano TX | 972-516-4255