Can you complete a debt restructuring agreement that’s closely supervised by the courts in 5 years exactly? Do you have assets to sell to pay off your debts? Are you still benefiting from a regular source of income? Would you like to protect your co-signors from paying off debts that you alone caused? If you answered every question in the affirmative, then you are ready to file for Chapter 13 of the Bankruptcy Code.
Here’s how to prepare for it and the legal proceedings that will follow suit.
- Understand how Chapter 13 works. When you invoke Chapter 13 of the Bankruptcy Code, you are given the benefit of a restructured debt payment that is free of interest. You will be given instructions to follow a very detailed plan of repayment that you will have to strictly adhere to. As soon as the decision is handed down, you are given 30 to 45 days to commence repayment. Your lawyer will guide you through a debt restructuring agreement that will work for you and your creditors. On the event that your creditors balk at the debt restructuring plan, you can still have this enforced upon the court’s approval and with the creditor’s appeal or objection duly noted and weighed in the pursuit of fairness.
- Seek eligibility for this option. The one and only important criteria that will tip the favor in your behalf is to convince the court that you have the means to make payments because you are still receiving a regular source of income. Selling your assets are good but it doesn’t guarantee continuity of debt servicing the way a regular income does.
- Make sure that a budget plan is drawn up. Your attorney and your accountant can help you make a budget plan for presentation to the courts and your creditors. This is one of the crucial points that will help you make progress in your case.
- Read similar bankruptcy cases that have to do with Chapter 13. You and your attorney can get more information from past cases that are similar with your own. Look for cases on Garnishment, Repossession, Loss of Business, Loss of Profit, Disability, Divorce (yes, spouses can bleed you dry), and other legal proceedings that have caused others to file for Chapter 13.
- Participate in court-appointed counseling sessions. Even before your Chapter 13 Bankruptcy case begins to move, the court will ask you to haul your debt-ridden derriere to counseling sessions that will enlighten you on matters about handling money and getting out of debt. Your counselors might be asked to testify in court about your participation and sincerity so you had better be serious about taking these sessions no matter what happens.
- Get all your financial records in place. Make sure you have every financial record to prove you’re down to the last cent, figuratively speaking. Bank records, demand letters, and accounting records are some of the documents that you need for evidence in court. These should be original and certified true copies.
- Listen to your lawyer and follow the advice of the court. Follow every professional advice that will be given by your lawyer and the court when preparing for your first court date. Believe it, every step that you take will be scrutinized to determine if your request to file for Chapter 13 gets off the ground or goes kaput.
Preparing for a Chapter 13 Bankruptcy case is something that you should consider as your last resort. A bankruptcy case is bad news so if you can make amends with your creditors now, do so without going through a legal entanglement.