What Are the Requirements for Chapter 13 Bankruptcy?

If you are considering filing for chapter 13 bankruptcy in St. Petersburg, it is important to know if your situation meets the requirements for filing. Chapter 13 establishes a three-to-five-year plan in which the debtor pays back their debt in monthly installments. Many people choose chapter 13 over 7 if they want to prevent foreclosure, stop debt collection, make up missed payments, and more. If the debtor makes their scheduled payments, at the end of their term, their applicable debt will be discharged.

Regular Income

To qualify for chapter 13 bankruptcy, the debtor must have a regular source of income as well as disposable income they can apply towards their debt repayment plan. A debtor usually completes a means test to determine how much will be repaid. Everything paid to creditors during chapter 13 has to at least equal the amount the creditor would have received through chapter 7.

Secured Assets

Many debtors in St. Petersburg who choose chapter 13 do so because they have secured assets such as a car or a home they wish to keep. If they have more equity based on their secured assets than they would be able to protect with Florida’s exemptions, then chapter 13 is often a better choice as well.

Making Up Payments Over Time

Chapter 7 liquidates assets to pay back debts when a debtor doesn’t have the money or will not likely have it in the future. Chapter 13 bankruptcy, on the other hand, reorganizes the debt and creates a repayment plan because the debtor can repay the debts, they just need more time. Therefore, those with valuable nonexempt property are more likely to avoid chapter 7 and opt for 13.

Repayment Plan

When filing a chapter 13 bankruptcy, debtors in St. Petersburg must propose a repayment plan schedule that demonstrates how they will repay their debts. This plan will demonstrate how much money will go towards their monthly debt repayment amount after considering other monthly expenses. The plan will also explain how the repayments will be divided up amongst the creditors. For the most part, priority claims are paid in full while unsecured claims are paid in part.

Contact Berkowitz & Myer for Chapter 13 Bankruptcy Assistance

If you are considering filing for chapter 13 bankruptcy in the St. Petersburg area, contact the law firm of Berkowitz & Myer. Our attorneys have the education and experience to help debtors through this complicated process. To schedule a consultation with a professional, call us today at (727) 344-0123 or contact us online.

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