Chapter 13 bankruptcy provides many individuals with their best possible option for debt relief. Unlike Chapter 7 bankruptcy, Chapter 13 enables debtors to eliminate debt without losing any personal assets.
Rather than liquidation, Chapter 13 provides a restructured payment plan to help erase debts.
Because the process of Chapter 13 differs from Chapter 7, there are different steps to making sure you qualify. Before deciding on which bankruptcy chapter to file under, it is important to know the pros and cons of each.
You should also be sure to know if you qualify for either Chapter 7 or Chapter 13 before attempting to file for bankruptcy.
Bankruptcy lawyers are an essential part of the process for any individual who wishes to file for bankruptcy. A bankruptcy lawyer will help guide you through the filing process and can also help determine if you are eligible.
If you are looking for experienced bankruptcy lawyers in Utah, Blue Bee Bankruptcy can help you.
Blue Bee’s attorneys have a combined 60 years of experience helping individuals and small businesses with their bankruptcy cases. What sets Blue Bee Bankruptcy apart from other bankruptcy lawyers is that they view debt-elimination as only half the battle.
Your Blue Bee attorney will also help you restore your credit after bankruptcy as well. Filing for bankruptcy can give you a fresh start on your financial future. But a good credit score can help you thrive after that fresh start.
When filing under bankruptcy Chapter 13, the debtor is assigned a restructured payment plan to pay off their creditors. Typically these payment plants will last from 3-5 years, and cover most of the existing debts owed. Once all planned payments have been made, any remaining debts are discharged (erased).
One of the crucial steps to filing for Chapter 13 bankruptcy is the Chapter 13 Disposable Income Test. This test’s purpose is to calculate your “disposable income” to ensure that your payment plan represents your “best effort.”
In a bankruptcy case, disposable income is any income leftover after accounting for all essential expenses. These expenses include payments for housing, food, childcare, clothing, utilities, insurance, and medical expenses.
Any income remaining after these payments is disposable income per the terms of your bankruptcy filing. Your disposable income is then applied to your structured debt repayment plan under Chapter 13.
The Disposable Income Test determines just how much disposable income you have available. Once your disposable income has been calculated, the court can determine whether your payment plan accurately reflects your financial situation.
This is done to prevent debtors from avoiding paying more than they owe to their creditors.
Another concept to familiarize yourself with while filing for Chapter 13 bankruptcy is the difference between secured and unsecured debts. Secured debts, and priority debts, are payments like child support, alimony, and mortgage payments. These debts take priority and are the first to be repaid after disposable income.
Unsecured debts, like credit card bills and other personal debts, are paid after priority and secured debts in your plan.
The Chapter 13 Disposable Income is different from the Bankruptcy Means test. Both of these tests are part of the process when filing for bankruptcy, and both involve testing your disposable income.
But while the Chapter 13 test confirms the debtor’s payment plan, the Means test determines eligibility. The Means test is primarily to determine whether or not an individual qualifies for Chapter 7 bankruptcy. Those who do not pass the Means test may then opt to file for Chapter 13 instead.
Working with an attorney who understands both the law and the unique circumstances of your case makes all the difference. At Blue Bee Bankruptcy, we take time to review your entire case to ensure you make the right decision. Contact us today to schedule a free consultation.
If you are in the stressful situation of having to file for bankruptcy, remember that there are advantages. At Blue Bee Bankruptcy, our goal is to help people rebuild their lives after filing for bankruptcy.
Our attorneys are knowledgeable in chapter 7, chapter 11, and chapter 13. We can help you make the right filing decision for your unique case.
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!
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