There are a lot of potential benefits that an individual can obtain in a bankruptcy declaration. For one, declaring bankruptcy helps a debtor pay back certain debts to creditors. Through this legal proceeding, an individual struggling financially can have a fresh start in life.
There are different ways of dealing with debt settlement. One of these is looking into filing Chapter 13, which is one of the many types of bankruptcy proceedings that may apply to you. To make the most out of your bankruptcy petition, promptly seek legal advice from a seasoned Phoenix bankruptcy attorney as soon as possible.
This article is divided into five sections, as follows:
- An overview of a Chapter 13 petition in bankruptcy
- Types of debt that you must repay when filing Bankruptcy Chapter 13
- Working on Your Proposed Debt Repayment Plan
- Average monthly payments in a Chapter 13 bankruptcy declaration
- Seeking legal help from credible Phoenix bankruptcy attorneys
An Overview of a Chapter 13 Bankruptcy Petition
In filing bankruptcy, you should consider different factors, such as the types of debt you owe and the bankruptcy chapter that will be best for you. Debtors who are planning to file for bankruptcy often choose between the liquidation or reorganization bankruptcy procedure.
If you wish to secure your assets while paying the debts you owe, declaring bankruptcy under Chapter 13 could be the best option for you. Here, whatever is left after deducting permitted expenditure (your disposable income) goes towards a debt repayment plan approved by the bankruptcy court.
Types of Debt that You Must Repay when Filing Chapter 13
If you are seeking debt relief and have decided to file bankruptcy under Chapter 13, you will be required to propose a payment plan that should enable you to repay debts in three or five years. It is generally recommended to seek legal advice from a credible local attorney before working on the necessary bankruptcy forms.
The trustee in bankruptcy filings will work with you to allocate payments to creditors, particularly for the following:
- Missed child support or alimony payments, unpaid federal or state taxes, wages owed to employees, and other priority debts that you must pay in full
- Secured debts that are due to be paid in full within the duration of the repayment plan, although you may cram down a home or car equity loan to minimize the balance (depending on the actual circumstances)
- Non-priority unsecured debts you would be receiving if you filed for Chapter 7 bankruptcy instead.
Working on Your Proposed Debt Repayment Plan
Under relevant bankruptcy laws, bankrupt individuals are generally given 36 to 60 months to pay back what is owed, with higher income filers usually paying more per month. The actual period will depend on the median income and your monthly income six months before filing a bankruptcy petition. Additionally, electricity, phone, tax, and child support payments are often made outside the payment plan.
It is highly recommended to seek legal assistance early to avoid mistakes that could complicate your filing. Our well-trained and dedicated Phoenix bankruptcy lawyers will assist you on how to file, explain relevant state laws, and help you have a successful bankruptcy filing.
Average Monthly Payments in a Chapter 13 Bankruptcy
A Chapter 13 reorganization bankruptcy will likely necessitate a $500 to $600 monthly payment, especially for debtors paying at least one automobile through the payment plan. However, since the bankruptcy court will consider a large number of factors, this estimate could vary greatly.
In cases where there are higher income and housing repayment requirements involved, the average payment goes up to $1000 to $2000. If you filed for bankruptcy to avoid foreclosure or are behind in-house costs, your Chapter 13 plan payment could be more or less $1500 per month. Additionally, high income, high debt Chapter 13 filers would usually be required to make payments between $2000 and $3000, or even more.
On the other end of the spectrum, however, basic repayment requirements could go as low as $200 to $300 per month. This is often applicable to a debtor who was forced to file Chapter 13 because he is barred from filing a Chapter 7 (since they filed a previous one recently). Trusted Phoenix bankruptcy lawyers can help you learn more about these situations.
Seeking Legal Help from Phoenix Bankruptcy Attorneys
Bankruptcy cases have helped countless individuals facing problems with their finances. However, because of the paperwork and supporting documents involved, filing for bankruptcy can be very stressful. As such, if you are considering bankruptcy, get in touch with a local attorney from a reliable Phoenix bankruptcy law firm. Call us at Phoenix Fresh Start Bankruptcy today and consult with professional and dedicated Phoenix bankruptcy attorneys.