Bankruptcy can be a sound way to resolve debt issues. In the case of a Chapter 7 bankruptcy filing, it can allow a debtor to liquidate assets in exchange for writing off some debt. Chapter 13, on the other hand, allows a debtor to keep his or her assets and shed unsecured debt if a payment plan is adhered to over the course of three to five years. This process isn't automatic, of course, so debtors need to be prepared to take the action needed to meet all of the requirements for a successful bankruptcy process. Let's take a look at the debtor's obligations during the Chapter 13 bankruptcy process.
At the beginning of the process, a debtor must submit various documents and records to the bankruptcy court. Amongst these documents are a certificate demonstrating that credit counseling has been completed, a copy of his or her most recent tax return and the proposed plan of repayment. A filing fee must also be paid.
Once the repayment plan is approved, a debtor must stick to it by paying creditors that are named in the plan. These payments must start even before the repayment plan is approved. Then, if the plan is approved, these payments must continue on a monthly or bimonthly basis. These payments are made either directly to the bankruptcy trustee or through a payroll deduction. These payments will be applied to certain priority debts first, but that process is handled by the trustee.
Sticking to a Chapter 13 bankruptcy repayment plan is critical to succeeding with this process. Those who are able to abide by their obligations can see true debt relief that allows them to secure a fresh financial start. Many Texans find that working closely with an attorney who is knowledgeable in this area proves extraordinarily beneficial, as doing so can provide them with a step-by-step guide to meeting all of the necessary bankruptcy requirements.