Using bankruptcy as a tool to get out of debt works well for many people, but it is not always an instant solution. If you use Chapter 13, your case will take time. If you are thinking about using this branch of bankruptcy, it might be helpful to understand how it works before working with a lawyer on your case. If you would like to know how it works, you should understand a few basic principles.
1. You Must Follow a Repayment Plan
One of the primary principles of a Chapter 13 bankruptcy case is it requires a repayment plan. The repayment plan makes it easier for you to repay your debts and lasts for three to five years. Chapter 13 aims to provide debt relief to people who have the financial means to pay the debts they owe. As a result, you will have a plan you must follow if you want financial relief.
2. The Case Must Get Approved
Your plan will not begin until your lawyer creates it and gets it approved by the bankruptcy trustee assigned to your case. The trustee must review the entire plan to ensure that it is fair and legal. After reviewing it, the trustee may ask for changes or will approve it. Once approved, your plan is a legal tool everyone involved must follow.
3. Your Creditors Must Follow the Plan
Your creditors are one of the parties that must follow the plan. For creditors to follow the plan, it means they must not contact you. Instead, they must accept the payments the trustee sends on your behalf. Your creditors cannot object to an approved plan.
4. You Must Make the Payments
The most crucial principle to understand about Chapter 13 is that you must make the payments. Paying the trustee for five years might seem like a long time, but it will be worth it if you complete the plan without missing any payments. If you encounter a problem making a payment, call your lawyer to see what you can do.
5. The Case Ends
If you are like the average person who files a Chapter 13 case, your plan will take five years. Once you make your last payment, the trustee approves the discharge of your case, and you may receive a discharge of some of your debts. When your plan ends, you should have all the relief you need. To learn more, contact a Chapter 13 bankruptcy lawyer.