If you are having some financial hardships, then you might have considered filing for bankruptcy. However, bankruptcy is not for everyone, so you should know all the facts before your commit. To help you out in that respect, here is an overview of Chapter 13 bankruptcy, one of the primary options for alleviating debt:
What is Chapter 13?
The short version is that Chapter 13 is a repayment plan that effectively restructures your various debts into a single debt that is to be paid over the course of three to five years, in payments that are made either once or twice a month. These payments are made to an individual known as the trustee, who then distributes those funds to your creditors.
Who is the trustee?
The trustee is appointed by the court to oversee your case and act as an impartial arbiter in the conflict between the debtor and the creditors. They are there to help you get rid of your debts, but also to ensure that the creditors get some of the money that they are owed.
The trustee has a few of key duties that they will need to fulfill in order to make sure that everything goes smoothly.
- They first need to look over the financial information of the debtor, so that they can best judge the current state of affairs. The debtor's income will play a key role later, when it comes to figure out how much they will need to pay.
- They will then need to hold a meeting between the debtor and the creditors, where the details of the plan will be hammered out. Questions may be asked of all parties, and they must answer under oath. This will lead to the creation of a comprehensive repayment plan that takes all of these factors into consideration.
- The repayment plan (if given approval by the court) will commence, with the debtor making payments once or twice a month to the trustee, who will then distribute those funds to the creditors according the aforementioned plan.
Who is eligible?
If you make more than a certain amount of money, then you cannot pursue Chapter 7 and must thus pursue Chapter 13 if you wish to file for bankruptcy. However, there is also an upper limit that you will need to keep in mind as well. If you owe more than the legal amount, then you cannot pursue Chapter 13 and must seek alternative means of debt relief. Contact a bankruptcy attorney at Reppe Law Office if you have any questions.