Chapter 13-Part 1

You have had a stretch of bad luck either personally or professionally.  More than likely, you have depleted your rainy day fund because of some event that has left unable to do "business as normal."  Maybe you had to find a new job,  had a major illness or injury in the family,had a change in your marital or simple made a series of bad financial decisions.  You need some time, a chance to take a deep breath without creditors calling or threatening legal action.  You do not want to file chapter 7 bankruptcy, because you need to keep your home, your vehicle, or maybe save your business, if possible.  Then, you need to consider filing personal or business bankruptcy under chapter 13.

Why Chapter 13?

Chapter 13 bankruptcy is essentially the ability to reorganize your debts and get them down to a level whereby you might have a chance of taking care of the important stuff and get your feet back on the ground.  You want to keep your possessions, satisfy your creditors, and save your family or place of business.  Basically, it does not matter whether you are doing it for personal or business reasons.  A chapter 13 bankruptcy works in the same manner.  Known as the wage earners plan, a chapter 13 bankruptcy may protect your business, your loved ones, and your possessions.  Although you might have to eventually change it to a chapter 7 bankruptcy, people have been known to bring their businesses back from the brink of closure and save their families from having to be destitute.  If you have any debt loans that have a cosigner, it will also protect them from legal action.
 

You Need Help

Even if you are only thinking about chapter 13 bankruptcy, you need a bankruptcy lawyer.   Do not try to do it yourself. Whether you are filing personal or business bankruptcy, there are so many details to consider.  Trying to represent you or your business, in order to save money, is foolhardy.  In fact, it can cost you the case in the end.  Select your lawyer with care.

 

Credit Counseling

In addition to finding a good lawyer, you will need to obtain a certificate of  credit counseling , whether you are filing for your business or your personal finances.  Your case will not even be accepted by federal bankruptcy court if you have not obtained a certificate of credit counseling. 

Getting it Together

Anyone who files for chapter 13 bankruptcy will be required to fill out a lot of forms that will tell the court about your financial status.  Your debt to income ratio is measured either looking at budget alone or in combination with a test called the Means Test.  The means test is an eight page formula that was designed by Congress to assist the court in determining what amount you should be repaying to your general unsecured creditors.   Also, the court will want to know what debts you have that are exempt from bankruptcy discharge.  For example, you cannot get out of paying child support, even if you are legally bankrupt.  

You will have to get all of your financial information together; including income tax returns, paystubs, bank statements and evidence of debt.  Do not mail them in, but make sure your lawyer has all of the necessary documents ready to go.  It may seem like a real pain at the time.  But, if you want the court to seriously consider your case for bankruptcy relief, you will have to lay all of your finances out for the court to see. .


In part 2 of filing personal or Business Bankruptcy under chapter 13, you will find out what paperwork the court will be anticipating, how you qualify, a hearing you will have to attend, how your plan will work, and what happens with a chapter 13 discharge.  Hopefully, these articles are informative and help you consider your option.  But, please do not think this is a substitute for good legal counsel.  If you are going to make a chapter 13 bankruptcy work for you, you will need all the help you can get