When people fall behind on their bills, the future might seem unsteady. When that unsteadiness goes on long enough, those same people may want to look into a fresh financial start in Memphis.
Bankruptcy sounds like a dirty word sometimes, but these legal methods of debt adjustments are tools. According to The Atlantic, about three-quarters of bankruptcy filings fall under Chapter 13. Knowing the process of this form of bankruptcy may help a person decide whether it is right for him or her.
Basic bankruptcy steps
Before filing, people must complete their official bankruptcy paperwork and take a credit counseling course. Then they file for the Chapter 13 bankruptcy where an automatic stay on what they owe takes effect.
This is temporary and those people filing, as well as their creditors, receive a notice of the bankruptcy. This includes the date of meeting with the creditors, a hearing date and a deadline by which the creditors must file claims of their own.
As the United States Courts details, people sometimes call this bankruptcy a wage earner’s plan. If all goes well, people begin to make payments under a proposed repayment plan. During this time, they attend the meeting of creditors to talk about any objections to modify the repayment plan.
After any objections or modifications, the debtors and creditors attend a confirmation hearing to address further objections and to approve the repayment plan.
Differences with Chapter 7
While both types of bankruptcy shield a debtor from garnishments and collectors, Chapter 13’s protections last as long as he or she makes payments on their payment plan. Starting a Chapter 13 bankruptcy often costs nothing at first while Chapter 7 may have more costs upfront.
Each type of bankruptcy provides different benefits and researching more may help people determine which one is right for them.