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Chapter 13 Bankruptcy Basics: What To Know

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Filing for bankruptcy is never an easy decision, but choosing which type of bankruptcy to file does not have to be as difficult. In fact, when you are looking for a solution that allows you to repay your debts under a different repayment schedule, Chapter 13 might be the solution you need. The more you understand about the Chapter 13 process and the expectations, the easier it will be for you to succeed.

Create a repayment plan that you can follow

One of the key elements of a Chapter 13 bankruptcy is the repayment plan that you establish. Repayment plans must meet the court's approval and settle your outstanding accounts. Sometimes, this requires a complex series of calculations and financial allocations. It's often easiest to work with a bankruptcy attorney to create your repayment plan so that you end up with an achievable plan that meets the court's expectations and fulfills your outstanding balances.

Follow through with the plan you put in place

Many people establish their Chapter 13 repayment plan without a solid understanding of the magnitude of that commitment. Remember that you'll have to make those monthly payments for the next several years, so be prepared with comprehensive budgeting and the discipline to see it through. You will have to prioritize those payments to avoid default and contempt of court. Talk with your bankruptcy attorney about the best ways to plan for your long-term commitments so that you can complete your bankruptcy case successfully.

Be prepared for unexpected expenses

The duration of a Chapter 13 repayment plan makes it vulnerable to issues with financial emergencies, unexpected expenses, and family financial disasters. You might wonder what you should do if something like this arises while you're in the midst of your repayment. The best thing you can do if you face a financial disruption is to call your bankruptcy attorney as soon as possible. They can help you negotiate an adjustment. If you need to petition the court for modification or any allowances, your attorney can help with that as well.

Work with a professional

The bankruptcy process can seem confusing and may leave you feeling intimidated. Work with a bankruptcy attorney to ensure that your petition and repayment plan meet the demands of the court. Your attorney can provide you with personalized guidance based on your financial situation, including your income and outstanding debts.

Contact a Chapter 13 bankruptcy attorney for more information.