Bankruptcy helps many consumers to become debt-free. However, filing a claim is a complex and often lengthy process. Most consumers who initiate a claim are facing foreclosure or don’t have access to an alternative debt-relief opportunity.
How to File for Bankruptcy
The first step to filing a bankruptcy claim is determining if you qualify. For chapter 13, claimants must have an income that is above the median for their county or residence. If they don’t qualify for chapter 13, they must file for chapter 7. To qualify for chapter 7, the claimant must have property or assets to liquidate to settle their debts.
What Happens in Chapter 13?
When you begin working with a bankruptcy attorney for chapter 13, you’ll devise a payment plan. Through this payment plan, you’ll utilize your income to settle your debts over a three-to-five-year period. You’re also required to use any expendable income you have after you deduct monthly obligations and household expenses. Once this payment plan is accepted, you’ll begin submitting payments according to the schedule provided by the court.
What are the Benefits?
With chapter 13, you can avoid foreclosure. The chapter provides an automatic stay for the full duration of your case. This prevents your mortgage lender from seizing your home. You are responsible for catching up any delinquent payments incurred prior to your bankruptcy claim.
How Does Chapter 7 Work?
Essentially, you’ll provide the deeds or titles for any property or assets identified in your claim to the court. A trustee is appointed to your case to oversee the sale of the property. Any exemptions assigned by the court to the property are returned to you after the sale. All non-exempted funds are sent to your creditors to settle your debts.
Consumers could become debt-free if they choose to file bankruptcy. They have the option to enter into a payment plan or to liquidate their assets. Through each opportunity, the consumer could settle all their debts amicably. According to federal laws, all claimants must complete a credit counseling course before they begin working with a bankruptcy attorney. To learn more about these processes, contact your preferred attorney now.
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