In the United States an individual, along with their Chapter 13 bankruptcy attorney in Wellington FL can file for two types of bankruptcy; Chapter 7 and Chapter 13. If the individual decides to file for Chapter 7 a court appointed trustee will dispose of all the bankrupts’ assets and use the proceeds to pay down as much of the accumulated debt as possible. Once this has been done the rest of the debt is discharged and the individual can start over. Chapter 13 bankruptcy demands that the debtor prepare a plan for repayment of all or part of the debt over a period of time, usually between three and five years but never longer. The debtor and his or her Chapter 13 bankruptcy attorney in Wellington FL prepare a repayment plan in full accordance with federal guidelines; the plan is then submitted to the trustee for approval and eventual supervision. The trustee pays the debts in accordance with a priority schedule and any debt left unpaid after five years is discharged.
Chapter 13 bankruptcy is available to people who fall into two distinct groups. The first group comprises those people who exceed the federal means test. This test determines if a person has sufficient income to actually pay off the debt over a period of time. The second group is comprised of people who are rich in assets and wish to keep them. A repayment plan lets the bankrupt keep his or her assets such as their home while fulfilling the obligations of the repayment plan that was developed in cooperation with the attorney.
The downside of Chapter 13 is the length of time it takes to fulfill the obligation to repay per the agreed upon plan. For as long as five years the debtors total disposable income outside of expenses that allowed by the court are going to be applied to paying down the debt. During this extended period the debtors disposable income is not his or hers to do with what they wish, all expenditures are subject to court approval. If, during this lengthy period of time the debtors personal circumstances should turn worse it may be necessary to renegotiate the terms otherwise the debtor may find that the plan is dismissed and the person will be right back where they started.
Debts are taken care of in order of priority with alimony, child support and back taxes taking precedence. Secured debts such as a mortgage are next and lastly are unsecured debt such as credit cards and medical bills.
A chapter 13 bankruptcy attorney in Wellington FL can help you devise a plan to repay your debts over a period of time and keep your assets. To discuss this in detail you are invited to contact The Law Offices of Sean I. Koplow.
