Struggling with debt? Are creditors calling? Would you like a fresh start? Filing for Chapter 13 bankruptcy protection may give you the “fresh start” you need.
Chapter 13 is quite common and gives you opportunities for reorganization. If you have been advised that Chapter 13 is best for you, here are some tips to help you through it.
Find a local attorney with significant Chapter 13 expertise. These cases are very complicated compared to a Chapter 7, and there are likely a few “go to” attorneys in the your area who handle the majority of cases. Seek them out. You don’t want someone who has to look at the book while working on your case, or doesn’t know and have a good working relationship with the local court system.
Since these cases involve multiple court appearances, your costs will be reduced by someone who is attending multiple rather than one hearing on a given day to reduce your share of the time and therefore cost.
The plan is the constitution of your case. It is what you will live with for the three to five years while the case is open, and it will govern your rights and responsibilities at the end.
Do what is required by the plan. Typically you will make a direct payment to a specific lender, one to the Trustee, and possibly others. Some lenders will reject your payment or not cash your check. If that happens, tell your lawyer, and save the money in a separate account so you have it when they finally demand it
Make sure you include all of them. The bankruptcy papers are sworn documents. There are substantial penalties for making knowing misstatements.
Trustee payments must be made by certified check or money order—no electronic payments. You may wish to pay through a private transfer service, (such as www.paymytrustee.com), that accepts electronic payments, charging $5 for each. The convenience alone is worth the fiver.
Ask questions about his/her qualifications such as “How many Chapter 13 cases have you filed last year?” Then you can make an informed decision on who to hire.
Make a commitment that you have a reasonable chance of keeping. The Chapter 13 will last from three to five years so you will have to make the payments not only for the first month, but every month.
These are very important. Read anything you receive from the court, your attorney, or the other side (your creditors). Make sure you understand them. If not ask your attorney.
Don’t call your creditors as you may give out important information that may come back to haunt you.
Although you legally may represent yourself in Chapter 13 as you may legally do your own brain surgery, don’t do it. Both are highly complicated and you will likely not be pleased with the outcome.
Chapter 13 reorganization gives the debtor (the person filing the bankruptcy) a chance to wipe out the same kind of debts as with Chapter 7 (actually a few more). In addition, you can change the terms of debt where the creditor holds security (car loan or mortgage).
For example, if the debtor’s house has a first mortgage higher than the current value, Chapter 13 allows the second mortgage to be removed. It can't be stressed enough that you should see a lawyer to guide you through this process. Financial issues can be life-altering and having them dealt with in the right manner can give you peace of mind, and the “fresh start” you deserve.
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