Experienced Chapter 13 Bankruptcy Attorneys serving Colorado Springs
For millions of adults who qualify, bankruptcy can be a financial lifeline that either allows the discharging of all unsecured debt, or allows a fair repayment plan that is tied to an applicant’s ability to pay. But in all cases, bankruptcy is a legal process that changes the equation when it comes to what a person owes and how that person will handle those debts.
We have always viewed bankruptcy that is handled in the proper way as a means by which our clients can get a second chance to rewrite their financial future. But the biggest question we deal with is which type of bankruptcy – Chapter 7 or Chapter 13 – makes the most sense for our clients. That isn’t always an easy answer, but in the case of Chapter 13, our client’s ability to pay creditors is a major deciding factor.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as ‘wage earner bankruptcy’ allows individuals who have a steady and reliable income to set up a repayment plan to eliminate most or all of their debt. Although it varies from state to state, you typically have three to five years to complete the repayment. If you are approved for Chapter 13 bankruptcy, there are steps that must be followed, including:
- Paying a Trustee a Monthly Fee – The trustee is in charge of your bankruptcy and distributes your payment to your creditors per your repayment agreement.
- Trustee Sends You Statements – These statements show exactly how much money you’ve paid each creditor, and how much is still left to pay.
- Provide Trustee With Annual Income and Expenses – At the end of each year, you must give the trustee an annual statement of your income and expenses. This is to ensure that you have not earned additional income that could be used to pay your creditors more than what was originally agreed.
Chapter 13 is an ideal option for clients who don’t want certain property – such as a home – sold off to pay creditors. It is also a good choice when a client’s level of income is too high to qualify for Chapter 7 bankruptcy protection.
In addition, filing for Chapter 13 lets you find a solution to debts that you can’t discharge in a Chapter 7, such as unpaid taxes and student loans, because you can include these in your repayment plan.
Who Is Eligible For Chapter 13 Bankruptcy?
To qualify for Chapter 13 bankruptcy, you must take a ‘means test’ that will determine whether the amount of your secured and unsecured debt falls under the maximum limits for filing. We can help you understand the existing limits and where you fall on the spectrum, but if your debts exceed the filing limits, your application may not be approved.
The filing limit is important, because if your debts are too high, you may not be able to fulfill the terms of your repayment plan, which sets you up for immediate failure.
It’s also important that your source of income is steady and reliable, because if you lose the ability to earn that income, you may ending up defaulting on your repayment plan.
The Importance of a Bankruptcy Attorney
When representing our clients’ interests in a chapter 13 bankruptcy case, our job is to make sure that we help them choose the best type of bankruptcy that will help set up a more promising future. And if chapter 13 bankruptcy is the choice, we will be there every step of the way, especially when it comes to attending the mandatory hearings with all your creditors.
If you are going through a bankruptcy, it can be a difficult time in your life, but the attorneys at Kinnaird & Kinnaird, P.C. have the expertise and experience to help you. Please contact us today for a free legal consultation.