Chapter 13 bankruptcy Austin TX to repay and discharge your secured and unsecured debts |
Posted: March 28, 2024 |
There is a stigma attached to bankruptcy, however, it could be the only option left to you if your debts have become overwhelming. In fact, the US Bankruptcy Code was enacted to help debt-ridden individuals have a fresh financial start by reducing the amount of debt, andeliminating the rest. If you do not qualify for the Means Test for a Chapter 7 bankruptcy, Chapter 13 could be the next best option for you. Chapter 13 bankruptcy Austin TX allows you to restructure your debt, and pay it off over a period of three to five years under the supervision of the court. The repayment plan must be a substantial amount to the creditors, if not in full, and for this, the whole of the debtor’s disposable income can be used for repayment. There are three types of debts under Chapter 13 bankruptcy Austin TX. These are: Priority Debt: These include tax obligations, child support, and alimony. Secured Debt: These include the home and vehicle, which are usually backed by some form of collateral. The creditor has a right to seize the collateral if the debt is not paid. Unsecured Debt: These are not backed by collateral. Credit cards are the most common example of unsecured debt.
Expert attorneys providing consulting services for Chapter 13 bankruptcy Austin TX, such as the ones available with Recovery Law Group, can help you throughout the complete process of bankruptcy, and give you a chance for a fresh financial start. One of the key advantages of filing bankruptcy is that it will immediatelybring a halt to creditors’ collection actions and harassment. A repayment plan will be worked out that will give you three to five years of time to repay your debts. Any amount of unsecured debt, which is still left after the completion of the repayment plan, will be eliminated, and your creditors cannot claim it from you. Repayment plan under Chapter 13 To be eligible for Chapter 13 bankruptcy Austin TX, your debt should be within Chapter 13 bankruptcy limitations. If your debt burden is too high, you will be ineligible, and may have to file an individual Chapter 11 bankruptcy instead. Moreover, your monthly income should be good enough to pay a substantial amount each month to your creditors. If not then bankruptcy court may not approve the repayment plan. Also, remember that Chapter 13 bankruptcy Austin TX is not available to small businesses and companies. Best Effort Rule The court can reduce the disposable income amount under Chapter 13 bankruptcy that you are paying toward nonpriority unsecured debts, like medical bills and credit card balances. But then you should be willing to sell your property and pay the proceeds to your creditors to reduce your obligation under the “Best Effort Rule.” To be successful with Chapter 13, your creditors must get at least an amount equal to the value of your nonexempt property. Otherwise, you may be switched to Chapter 7 bankruptcy, and the court-appointed trustee will sell the nonexempt property and pay your creditors. When creditors are repaid under the plan, they are barred from initiating or continuing any collection actions against you, to collect the discharged amount.
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