Debt relief can be complicated. Especially if you have secured debts or priority debts like taxes. Debt relief through bankruptcy may be possible. It is important to understand the Chapter 13 bankruptcy preparation process. Take the time to speak to a Houston bankruptcy lawyer about what to expect.
Chapter 13 Bankruptcy Preparation
First, understand the differences between a Chapter 7 and a Chapter 13 bankruptcy. Unlike Chapter 7 bankruptcy, you will be making some monthly payments to repay your debt. A Chapter 13 bankruptcy works to eliminate your debts over a series of affordable payments. This means that it will take you a few years to be debt free. However, the benefits of a Chapter 13 are greater than a Chapter 7 in some ways.
Consider your assets. There is little to no risk of asset liquidation in a Chapter 13. This is because you are repaying the debt, not having them erased by liquidation. This offers you a chance to resolve those complicated debts like mortgages, car loans and some back due taxes. Since you are repaying the debt, you can keep the asset.
Second, the repayment plan is called a Wage Earner’s Plan in Chapter 13. The court develops this plan based off a calculation of your income and financial ability to make the payments. In order for a Chapter 13 bankruptcy to be successful you must be able to make your payments on time. If you miss a payment your case could be dismissed. Therefore, be sure to provide the court a detailed list of your creditors and your sources of income.
Finally, make a plan for your bankruptcy exit. It is important you develop tools to keep you out of debt in the future. You don’t want to risk losing your assets again simply because you failed to plan for life after bankruptcy. Keep up with your budget and prioritize your payments towards your secured assets.