An individual with a regular income who wants to return part or all of their debt over an established period without having to deal with the creditor’s constant calls can apply for Chapter 13 bankruptcy, also referred to as an organization’s bankruptcy. You will have to work with a trustee in Los Angeles to develop a repayment plan for all of your debt over three to five years when you file for Chapter 13 bankruptcy.
Paying off the debt within a given time frame essentially includes restructuring the entire loan in a monthly way, and it can be done with the help of a los angeles chapter 13 bankruptcy attorney. The trustee will allocate the money to your creditors, and you will be required to pay them each month.
What Is The Repayment Structure in Chapter 13 Bankruptcy?
In Chapter 13 bankruptcy, you will create a repayment plan that will outline how you will pay off your debt over 3-5 years. This plan is made to fulfill your financial situation, and it must be approved by the bankruptcy court in order to get started.
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How Does Chapter 13 Bankruptcy Work?
- File A Petition With The Court
You or your Attorney has to file a petition with the bankruptcy court present in your jurisdiction. This petition includes a list of your creditors which includes the amount of debt owed to each one of them. They will also take a list of your assets and all the possible income and expense streams you have. The filing fee for the Chapter 13 bankruptcy is around 300 dollars and can be paid in installments in certain circumstances.
- Automatic Stay
When you file your petition, an automatic stay for your guests will be applicable, which means that creditors will have to stop all the collection activities. This includes phone calls, letters, and lawsuits. Creditors cannot contact you or your employer to collect any debts. This automatic stay provides immediate relief from your creditor harassment and gives you time to focus on how to structure your repayment plan.
- Coming Up With A Repayment Plan
You or your attorney will have to propose a repayment plan that outlines how you will repay your debt within 3-5 years. Making sure that your plan provides the outline for paying all the priority debts, such as taxes and child support, is very important.
Make sure that your plan provides for partial payment of unsecured debts such as credit card and medical bill debts. It is very important for you to show how regular payments will be made to the trustee. This plan has to be approved by the court and the creditors in order to be effective.
- Making Monthly Payments To The Trustee
It is very important to make constant monthly payments to the trustee, who will distribute the funds to the creditors according to the approved repayment plan. The trustee will be responsible for collecting the payments from you and distributing the payments to creditors while monitoring your progress and reporting it to the court. You have to make timely payments to the trustee in order to avoid any default on your repayment plan.
- Completion of Repayment And Discharge
For the completion of your repayment method, you will get a 3 to 5-year repayment period where you will get enough time to make all the required payments to the trustee. After completing the repayment method, discharge is issued, meaning most of your debts are eliminated.
This will give you a restart and allow you to rebuild your credit and financial life. Chapter 13 bankruptcy is a complex process and it is very important to work with an experienced attorney to make sure that you go through the process peacefully. Make sure that you choose the right one.
