Undergoing credit counseling at an “approved non-profit budget and credit counseling agency” within 180 days prior to filing for Chapter 7 or Chapter 13 bankruptcy is required as per the new bankruptcy law that came into effect on October 17, 2005. Taking place individually or in a group, in person, on the telephone, or over the Internet there are various ways to go through this credit counseling and Section 111 of the new bankruptcy law provides that the bankruptcy court clerk shall maintain a publicly available list of approved credit counseling agencies. Those who are considering bankruptcy need to contact their local bankruptcy court to find a credit counseling agency located in their neighborhood.
When you decide to file for bankruptcy you need to Ensuring that you are filing for the right type of bankruptcy is very important when deciding to file for bankruptcy and Chapter 13 bankruptcy is designed to help debtors make proposals and carry out a repayment plan over a certain period of time. Working best for individuals with a steady income, one needs to be eligible to file under this chapter and the court has to permit them to do so based on the outcome of a means test and credit counseling course.
There is a standard procedure that is followed when choosing to file chapter 13 bankruptcy. Going through the credit counseling procedure, a recently additional requirement under the new laws, the credit counseling has to be through a government approved credit counseling agency and it is done at least six months before filing the bankruptcy. Candidates who choose to file chapter 13 bankruptcy are necessitated to pass the means test and this test measures the earning capability.
The repayment plan is the most important part of the Chapter 13 bankruptcy and shows in detail how much you will pay towards each debt. The priority debts should be paid back in full as listed on the plan. Any leftover funds being allocated to your unsecured debts must also be indicated in the plan, in addition. Your income and your debt influence the time span of the debt repayment.
Your creditors cannot demand payments for what you owe them once you have filed chapter 13 bankruptcy and can only demand this through a bankruptcy court. The advantage of reducing the creditor’s claims to a lower amount is available to the debtor and after then negotiating with the creditors; a decision is made after an agreement is reached by both parties. Ultimately, your plan ends when you have paid back all your debts in full.
No one wishes to be in serious debt with creditors knocking on their door. However, unfortunately, it sometimes does happen. And, when it does happen, filing chapter 13 bankruptcy keeps the creditors at bay and helps people come up with a plan that they can use to become debt free. Good luck!