Reorganization of Debt Under Chapter 13

If you are having financial problems and facing a foreclosure, a reorganization of debt under Chapter 13 bankruptcy just might be the solution that you are looking for.

What is Reorganization of Debt Under Chapter 13?

Unlike Chapter 7 in the Bankruptcy Code, Chapter 13 allows you to put a payment plan together with your creditors instead of using assets to pay off debts and then forgiving the remaining balance. Chapter 13 enables you to pay off your debt, while getting back on the right track financially.  Done under the discretion of the Bankruptcy Court, a Chapter 13 Bankruptcy even offers a person a second chance to save their home from the ever dreaded foreclosure.

When you are filing a Chapter 13 Bankruptcy for purposes of reorganizing your debt, the process is fairly simple.  First, you will need to file a petition for a Chapter 13 Bankruptcy with the Bankruptcy court where you live.  In addition to the petition, you should include:

• A supplemental list of assets and liabilities,
• Current income and expenditures,
• Unexpired leases and
• An explanation of your financial affairs.  
• You should also have a plan developed for a debt repayment plan that you can submit with your supplemental list.
• Additionally, you should have a statement of monthly income filed at the court that includes are verifying tax returns.
• You should be prepared to pay a sizable case filing fee as well as an administrative fee to the courts.
• It would also be a wise idea to have a comprehensive list of all of the creditors that you owe and the nature of the debt owed. 
• Consider notating the frequency of your monthly income (that is whether you get paid monthly, bi-weekly or weekly) as well as the sources that usher in your monthly income (this could be your employer, side gigs, social security or savings). 
• Also make a note of any property that you own or co-own as well as every detail of your monthly living expenses (from your car payment, to utility bills, clothes for the kids, what have you – list it all). 

These things are crucial in determining how you will pay back your debts.

Once the Chapter 13 petition is filed, a majority of your collection actions will automatically cease. It has been said that if you are in default on your mortgage loan, filing a Chapter 13 Bankruptcy stops the loan company dead in their tracks – therefore ending any and all efforts of foreclosure, including those foreclosure proceedings that were currently in the works.  The reorganization of debt under Chapter 13 thus usually proves to be a beneficial option if you feel as if your back is up against the wall financially.

Getting Help

If you are considering trying to get a reorganization of debt under Chapter 13 bankruptcy, consult with an experienced bankruptcy attorney who can discuss your eligibility and options.