What to Know About Chapter 13 Laws Before Filing

Knowing chapter 13 laws before filing can be the difference between successfully reorganizing debts or cases being dismissed. As of 2005, the bankruptcy laws have changed. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (2005), people must follow step-by-step instructions before and after filing for chapter 13 bankruptcy.

Chapter 13 Depends on Eligibility

Although people may want to file for chapter 13, not everyone is eligible to do so. Thus, before filing bankruptcy people should know if they have enough money to qualify. The U.S. Bankruptcy Court has a means test which determines whether people are eligible to file. If people pass the means test, they qualify for chapter 7 instead of chapter 13. However, for the people who fail the test they have enough disposable income to continue with their bankruptcy.

People Must Enroll In Credit Counseling Before and After Chapter 13

Within 180 days of filing, people must enroll in pre-bankruptcy credit counseling or their cases will be dismissed. The pre-bankruptcy credit counseling is only one session and consist credit counselors reviewing people’s finances and suggesting bankruptcy alternatives. Also, before any chapter 13 cases are deemed successful discharged, or completed, individuals must attend another credit counseling session. The post-filing debtor education course consists of learning new ways to manage future debts. Both sessions must be from credit counseling organizations that are approved by the U.S. Bankruptcy Court. Also, the sessions cost from $50 to 100 to attend unless individuals complete a fee waiver form.

Remember that Chapter 13 Cases Depend on Making Payments

Individuals must remember that chapter 13 cases depend on making payments. So, they have to make sure that payments are made to the bankruptcy trustee for their old or back debts and payments are made on their current debts. In other words, someone who is repaying their mortgage company through their chapter 13 must continue to make monthly payments to the mortgage lenders. If either payment is missed the bankruptcy cases can be dismissed for non-payment. Therefore, people must keep all payments current to complete their chapter 13 and eliminate debts.

Seek Legal Assistance about Chapter 13 Laws before Filing

Bankruptcy lawyers are there when people need them. They will explain all chapter 13 laws and assist with determining if individuals are eligible for filing bankruptcy. Also, they will file the required bankruptcy paperwork for people.