As someone considering bankruptcy, you have several options available to you. Chapter 13 allows you to create a debt repayment plan instead of liquidating assets. If you can manage a repayment plan, this may be an attractive option for you.
But before you go with it, you should know the obligations you will face. After all, they are crucial to your success with this option.
Steps to take before proceeding
The United States Courts examine your obligations as a debtor filing for Chapter 13 bankruptcy. First and foremost, your obligation is to stick with the repayment plan and pay back your debts. Understand that there is no second option after Chapter 13. If you fail to repay your debts, you could face serious consequences.
Next, know that you must pay your filing and administrative fees before proceeding. In other words, you need to have enough money from the start to cover your debts as well as the money needed to get the necessary paperwork.
Paying back in order of importance
Know that you need to pay debtors back in order of importance, too. For example, alimony and child support payments fall under priority debts. You must focus on paying these back first. After that are other secured debts, like liens. Finally, you have your unsecured debts. This can include things like union dues and credit card bills. You must pay an equal amount to your nonexempt property.
Finally, you must keep up with secured debts that survive bankruptcy. This can include your mortgage or personal loans. As keeping track of finances and debts often gets complex, you may want to contact a legal expert. They can help guide you through the process.