Hello, my name is Quianna Ridalgo. I enjoy talking to others about bankruptcy case outcomes. Court officials handle each type of debt, from credit cards to home loans, differently. Debtors must carefully prepare themselves for the court proceedings to cope with the outcome appropriately. The way creditors handle the discharged debt also interests me. Bankruptcy attorneys assist their clients with each step of the bankruptcy process from filing paperwork to meeting with creditors. Debtors and creditors both receive counsel that helps them move forward appropriately at every point in the case. The information I share on my site may help you learn about everyone's role in these complex cases. Feel free to come by anytime to learn more information about this interesting subject.
Chapter 13 bankruptcy can help you catch up on past due payments, pay off some bills, and get back on track financially. While it's much easier to get approved for a chapter 13 bankruptcy than it is a chapter 7, here are two issues that could cause the court to reject your petition.
You Don't Make Enough Money
At the fundamental level, chapter 13 bankruptcy is a state-run debt consolidation program. The court gathers all your debts into one big pile and pays each creditor a portion of your monthly payments according to the creditor's priority type. With a few exceptions, any unpaid balances left at the end of your case are wiped out.
As part of the process, the court determines your monthly payments based on the total amount of debt that must be paid within the 3 to 5 year time limit. It then calculates your disposable income, which is whatever you have left after paying your living expenses.
If your plan payment doesn't fit into your budget no matter how much they massage the numbers to get it as low as possible, then your chapter 13 won't be approved.
For instance, you have $30,000 worth of debt that must be paid by the end of the case, meaning your plan payments will be anywhere from $500 to $833 per month. If you only have $400 worth of disposable income after expenses, you won't qualify for chapter 13.
Sometimes your attorney and the trustee can adjust the numbers to close the gap between disposable income and plan payments if it's small enough. If it's too big and you don't anticipate making any more money down the road, your case may be converted to a chapter 7 or dismissed.
You Have Too Much Debt
You can have plenty of disposable income to cover your plan payments, but your case can still be rejected if you have too much debt. The total amount of your unsecured debts (e.g. credit cards, personal loans) can't exceed $394,725 and your secured debt (e.g. homes, vehicles) can't be more than $1,184,200.
When the debts exceed the limits, you may have to file chapter 7 first to get rid of some of it before filing chapter 13. There are no debt limitations in chapter 7, so you can eliminate as much as you need and then file Chapter 13 to handle whatever is leftover.
For help with your debt situation, go to sites like https://www.taylorcrockett.com/.Share