What You Need to Know When Filing for Chapter 13 Bankruptcy
Claimants may choose any chapter of bankruptcy as long as they meet the eligibility requirements. For chapter 13, they must have an income that is greater than the median for their household size. If their income is lower, they may qualify for chapter 7, but they will not qualify for chapter 13. The claimants must provide income statements for the last six months or two years of tax returns to verify their income.
Setting Up the Repayment Plan
A chapter 13 bankruptcy plan is a structured plan for paying off the person’s debts. The claimant and their attorney create the plan and submit the plan to the court for approval. The plan must define a monthly payment amount that is divided among their creditors to pay off the debts within a period of three to five years. The court must approve the plan before the person starts the monthly payments. Claimants can learn more by reviewing bankruptcy law in Oklahoma now.
The Meeting of Creditors
The meeting of creditors gives all creditors the opportunity to decide if they want their account included in the bankruptcy. If they refuse, the judge may overrule them and include the debt in the plan anyway. However, there must be valid reasons for the judge to take this step. The creditors can attend the meeting if they choose, but they are not required to. Once the meeting has concluded, the judge indicates what debts are included in the bankruptcy plan, and the claimant is notified through their attorney.
How the Automatic Stay Works
The automatic stay protects the claimant against legal action by creditors. Once the bankruptcy claim has been approved, the automatic stay is activated. None of the creditors can start any legal proceedings to collect outstanding balances. The claimant has the automatic stay for the full duration of their bankruptcy case, which can last up to five years.
What to Do With Disposable Income
The claimant is required to use all their disposable income to pay off debts that were not included in the bankruptcy claim. The court monitors the claimant’s income to ensure they remain compliant with all orders in the bankruptcy case. If they use disposable income for other reasons, the court could discharge the entire case. If the case is discharged early, the claimant is responsible for all debts included in their claim immediately following the discharge.
What Debts Will Be Discharged?
The judge will discharge certain debts through bankruptcy. These debts include unsecured credit card debts. After they are discharged, the claimant must complete their case as directed in the repayment plan. If they complete it entirely, all discharged debts are not their responsibility, and they are absolved of the entire balance.
Claimants who are eligible for chapter 13 bankruptcy start a repayment plan according to the court’s instructions. They must pay the payments each month directly or set up garnishment through their employer. Chapter 13 bankruptcy could help claimants become debt-free within five years, and the claims provide lasting protection against legal actions.