When people think about personal bankruptcy, they think about the discharge of debt. That’s what a Chapter 7 bankruptcy is about. Chapter 13 bankruptcy involves a reorganization of a debtor’s finances. If the reorganization is approved, the debtor will make payments every month to a Chapter 13 trustee for between three and five years. In turn, that trustee disburses that money to creditors of the debtor who have filed valid claims.
The Means Test
The purpose of this test is to determine whether a debtor has sufficient disposable income to propose a meaningful Chapter 13 plan. If so, it’s the policy of the bankruptcy court to have the debtor pay back at least some of his or her debt rather than discharging it in a Chapter 7 proceeding. According to our Chapter 13 bankruptcy lawyers in Valdosta, if a debtor doesn’t qualify for a Chapter 7 discharge, a Chapter 13 reorganization is still an alternative. The debtor is still going to need to show that he or she is eligible for Chapter 13 reorganization, though. Here is what must be done:
- Attend and complete credit counseling that is approved by your bankruptcy trustee.
- Present a W-2 or tax return showing that your income is sufficient for a Chapter 13 plan.
- Submit a statement of secured and unsecured debts that are within the applicable legal limits.
- Swear that you have not filed for a Chapter 7 bankruptcy in the last four years or a Chapter 13 bankruptcy in the last two years.
Completion of the Plan
During the pendency of the Chapter 13 proceeding, your attorney and the bankruptcy court will work out a reorganization that is based on your income. Upon successfully completing the three to five-year payment plan, your remaining debt is discharged.
Upon the filing of your Chapter 13 petition, you won’t need to deal with your creditors until such time as a reorganization plan is approved. Arrange for a free consultation and evaluation with our Chapter 13 bankruptcy lawyers in Valdosta by calling Charles Farrell Jr LLC at 000-000-0000. You can even use our easy contact form.
