If you’ve fallen behind financially and can't seem to catch up, chapter 13 bankruptcy could be the answer. Also known as reorganization bankruptcy, chapter 13 will allow you to implement a more manageable repayment plan while discharging applicable debts in the process. A bankruptcy lawyer can determine if you qualify after evaluating your specific circumstances. In the meantime, here’s some general information about this approach to debt relief. 

Who Is Eligible for Chapter 13?

If you earn too much to qualify for chapter 7, a bankruptcy lawyer may recommend pursuing chapter 13. Petitioners are eligible if they have less than $419,275 total in unsecured debts and less than $1,257,850 total in secured debts. You must also have at least some disposable income because you will be required to make regular monthly payments for three to five years before any remaining balances can be discharged. 

What Happens During Chapter 13 Proceedings?

Unlike chapter 7, there is no liquidation process during chapter 13. That means petitioners typically get to keep all their assets, including those that are nonexempt. Instead, you will devise a reasonable repayment plan, which you must submit for approval within 15 days of filing the petition. Sometime in the weeks that follow, there will be a meeting of creditors, during which you will answer questions about your financial situation. This is the first time you will meet the trustee, who is responsible for managing your bankruptcy estate. 

Within 45 days of this meeting, there will be a confirmation hearing. At this proceeding, you will learn if the proposed repayment plan has been accepted, denied, or modified. Once the plan is finalized with the help of your bankruptcy lawyer, it will become a court order, and the trustee will collect the monthly payments and distribute the funds accordingly. Any nonpriority debts that remain after the plan has ended will then be discharged. 

At Padgett & Robertson, Attorneys at Law, they never judge clients for the circumstances they’re in. Instead, these bankruptcy lawyers help consumers devise practical solutions for achieving lasting debt relief. Based in Mobile, they’ve been representing the residents of southern Alabama for more than 35 years. To schedule your free case evaluation, reach out on their website or call (251) 342-0264. 

Disclaimer: No representation is made that the quality of legal services to be performed is greater than the quality of legal services provided by others. We are a debt relief agency. We help people file for Bankruptcy relief under the Bankruptcy Code.