Chapter 13 Bankruptcy
Chapter 13 is just one of the many options that you can choose from when you need to seek bankruptcy protection from your debts. It is generally considered a better option that straight liquidation under Chapter 7, but not as extensive as a Chapter 11 bankruptcy for large companies.
Because of the volatile nature of doing business, it can be possible for you to be filing for a Chapter 13 bankruptcy protection sometime in the future.
Hence, it is important that you should know something about it so you can be ready when a necessity arises. Here are some things that you should remember when considering filing a Chapter 13 Bankruptcy protection.
Everything Starts With a Petition
That’s right. Once you start filing a petition for bankruptcy protection in your local bankruptcy court, you are then automatically protected. The court then notifies your creditors that you are under bankruptcy protection. A stay is then enforced upon any collection. At this point, your creditors will not be able to collect any payment from you regarding your debts. This is what they term as the “automatic stay” because once the filing is approved, immediately the court takes steps to bar creditors from making any collections.
The automatic stay also applies to litigation. If you have any cases pending in any court, then those cases are stayed as well. The bankruptcy proceeding takes more importance, and they will not resume until your bankruptcy case is resolved.
File a Repayment Plan
The goal of a bankruptcy case is not to escape from your obligations as a debtor: instead it is designed to help you to be able to pay up your debts under a structure that is favorable to you. That is why you should file a repayment plan together with the petition, so you can show your creditors that you have a sincere intention to repay your debts but you only need debt restructuring so you can afford the payments.
Attend All Meetings Related to the Case
These meetings are all important. In here, you get to sit down with your creditors and discuss your current financial situation. This way, you can work out on a compromise and a debt repayment plan that will be beneficial to both you and your creditors. These meetings will also discuss the validity of your initial repayment plan, as well as allow creditors to make objections if they do not agree with your plan. You need to be present in all of these so you can watch the progress of your case.
Make Your Payments
The most important part is to make payments. It is not advisable to wait until approval of your plan. In fact, it is recommended that you make payments a month exactly after you file your petition.
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