There are many people who go through financial hardships throughout their lives. Instead of letting the situation become overwhelming and impossible to handle, it is important to know that there are options. When a person is struggling financially, they have the option to file for bankruptcy. While it may seem scary, filing for bankruptcy allows an individual to get back on their feet and have a fresh start financially. There are different types of bankruptcy available to individuals depending on their financial status. One option that is available to debtors is Chapter 13 bankruptcy. During this time, it is important to have an experienced bankruptcy attorney to navigate the situation.
Chapter 13 Bankruptcy
When a family wishes to file for Chapter 13 bankruptcy, they are required to meet certain requirements. To file, they must have assets, value to their home, or earn above the average income for a family in the country they live. Individuals who file for this type of bankruptcy can be protected by the Bankruptcy Court, allowing them to keep all their assets. In exchange, the debtor is required to create and submit a “plan” to repay their debts. This will let them repay the debts they owe over the course of three to five years.
In repaying these debts, it is important to know what a debtor will still owe and what debts will be discharged. Under their plan, debtors must repay their unsecured creditors what they can afford to pay based on their income and expenses. This includes credit card debts, medical bills, personal loans, or debts owed on car loans. Other debts that must be paid are recent income taxes, student loans, alimony and child support payments, restitution or compensation ordered by Criminal Court, debts incurred by fraud, and any civil judgments for injuries that occur due to intentional torts or driving while intoxicated.
The Automatic Stay
When a person files for any type of bankruptcy, the “Automatic Stay” is enforced by the Bankruptcy Court. This is a system that prohibits creditors from taking part in any collection activities towards the debtor. This includes lawsuits, collection letters or calls, bank restraints, foreclosures, or repossessions. This allows the debtor a sense of relief from any harassment as they begin to pay back debts through their bankruptcy plan.
When the Automatic Stay is enforced, there are certain benefits for the debtor. This can include:
- It is enforced immediately after filing for bankruptcy
- Collectors cannot pursue debts while it is in place
- It prevents harassment
- It gives debtors breathing room to recover their finances
Contact our Firm
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.