The Guidelines For Chapter 13 Bankruptcy

Maryland consumers can find lasting debt relief opportunity through chapter 13 bankruptcy. These claims allow consumers to avoid foreclosure and repossession. Through this chapter of bankruptcy, these consumers acquire an automatic stay to prevent these legal actions for up to five years.

Taking the First Step

The first step in a bankruptcy case is to establish eligibility. For consumers in Prince George County, they must have an income of higher than $71,696 annually to qualify for chapter 13. If their income is below this county median, they qualify for chapter 7 only. However, if they qualify, they could utilize either chapter to settle their debts.

After eligibility is established, the consumer must enroll in a credit-counseling program. The program must be state approved. The consumer could acquire a list of state-approved programs from their attorney. They must complete the course before they proceed with their bankruptcy claim.

Establishing a Repayment Plan

The purpose of chapter 13 is to reorganize the consumer’s debts. This allows them to pay smaller payments on each debt. The court places these accounts together and acquires payments from the consumer to settle the debts. The court chooses to either garnish the consumer’s wages for the payment or they submit the payments to the court directly.

The court evaluates all debts owed by the consumer. They review the consumer’s monthly obligations such as household expenses. They compare these values to the consumer’s income to determine the most appropriate payment structure. Any expendable income is used to pay debts that aren’t included in the bankruptcy claim.

After the court assigns a payment plan, the consumer must pay this value each month or face a discharge of their case. If the case is discharged, the automatic stay is canceled, and the consumers is responsible for all debts even if the court discharged them.

Chapter 13 bankruptcy provides consumers an opportunity to settle their debts. The process helps consumers to prevent potential legal actions by their creditors. This includes lawsuits for accounts that are delinquent or that have entered charge off status.

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