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Bankruptcy May Be Your Option

How does Chapter 13 bankruptcy work?

Individuals who are considering bankruptcy as a means of debt relief usually consider the options of Chapter 7 or Chapter 13 bankruptcy. One of the key differences between these two forms of bankruptcy is whether a person seeks to make a fresh start after discharging most debts and liquidating assets, or if he or she wants to make an arrangement to pay off creditors through a payment plan.

For many people, Chapter 13 is the preferable option, as it allows a person to repay debts by having amounts owed reduced or reorganized. This post provides a brief introduction to some of the considerations and characteristics of Chapter 13 bankruptcy.

Filing for Chapter 13 typically requires a person to submit a substantial amount of information to the bankruptcy court or a trustee assigned to an individual’s case. Some of this information includes:

  • Asset listings, as well as income and expenditures information
  • Credit counseling certificate
  • Statements of anticipated income or expenditure changes
  • List of creditors
  • Amount of claims filed by creditors
  • List of properties owned
  • Tax returns

After all the pertinent information is gathered, the trustee that has been assigned will meet with creditors and discuss proposals for a repayment schedule. There will then be a courtroom hearing on the plan that is agreed upon by the individual, the trustee and the creditors. Unless modifications are required, the plan is confirmed and the individual will be responsible for keeping up with the payments and refrain from taking on new debt going forward until the debt is repaid.

This is just a very brief overview of how a typical Chapter 13 bankruptcy filing proceeds and is not an indication that it is exactly the same for every person. However, having an idea of what the process of Chapter 13 looks like may make it less intimidating and more feasible as an option for debt relief. Speaking with an attorney familiar with bankruptcy in Tulsa can help you determine if Chapter 13 is right for you, or if another option may be more appropriate.

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