For those considering bankruptcy, there are many options to choose from. For individuals, the choice is between Chapter 7 and Chapter 13. Filing for bankruptcy has repercussions and there are costs attached – not just in the form of lawyer fees but also on credit scores. Besides, bankruptcy will not make debt like alimony, student loans, taxes, and even child support disappear.
How Lawyers can Help with Filing
Chapter 13 is a filing option available to some business models and individuals. Utah Bankruptcy Professionals say that an experienced Salt Lake City bankruptcy attorney can explain how it can reorganize debt and if it can be discharged or even wiped away completely.
As long as a person’s debt is below $400,000 for unsecured and about a $1,000,000 for secured debt, you can file Chapter 13. Only individuals and businesses that are sole proprietorships or partnerships can file for this. Under this heading, a debtor should have a steady source of income, agree to create a payment plan and then work on repayment.
Steps Involved in the Process
1. The first step is to file a petition. Chapter 13 bankruptcy requires the payment of set fees and a list of documents which include a list of assets, debt, bills, and sources of income.
2. The next step involves the appointment of a trustee who will administer the process. It is his/her job to collect payments from the debtor and ensure payment to creditors, according to the payment plan.
A payment plan must be set up within two weeks of filing. The plan lists out how creditors get paid over a period of three to five years. Once approved, a debtor should keep up with payments so that all debts are paid off.
Why Chapter 13 is a Better Option
Under this type of proceeding, it is not allowable to foreclose an individual’s home. Even though the list of debt items is longer under Chapter 13, it is better to file this as the impact on credit history is shorter – only seven years.