When people in Davidson, and throughout Tennessee, are struggling with overwhelming debt, they often consider declaring bankruptcy. For individuals and couples filing jointly, Chapter 13 bankruptcy is one of the most common options. In order to ensure this is the right option for their circumstances, it behooves people to understand how Chapter 13 bankruptcy works.
Like other bankruptcy filings, Chapter 13 bankruptcy begins when a person files a petition with his or her local bankruptcy court. According to the U.S. Courts, people should include listings of their current earnings and expenses, assets and liabilities, financial affairs, and unexpired leases and executory contracts. Additionally, Chapter 13 bankruptcy filings should include a certificate of credit counseling.
Through Chapter 13 bankruptcy, people establish repayment plans to pay back all, or a portion, of their debts. Through such plans, installments are made to creditors through a bankruptcy trustee for a period of three or five years. Proposed repayment plans, which typically establish more manageable payments, must be filed within 14 days of filing the petition with the court, according to the Internal Revenue Service. In most cases, however, people file these plans along with their petitions.
A meeting of the creditors must be held before the court approves a Chapter 13 repayment plan. This meeting, which is held by the bankruptcy trustee, takes place between 21 and 50 days after the petition is filed, according to the U.S. Courts. At the creditors meeting, the filer is placed under oath and is asked questions about his or her financial affairs by the trustee and creditors. If creditors do not feel that their claims are treated properly in the plan, they have the ability to object to the plan’s confirmation.
Navigating the process of a Chapter 13 bankruptcy can be challenging, which may make an already difficult time harder. As such, those considering this step may find it of benefit to seek legal counsel. An attorney may help them understand their options, as well as guide them through their filing.