In Utah, you could choose from two types of bankruptcy: Chapter 13 and Chapter 7. With Chapter 7, you get a clean slate because most of your debt will be discharged, with Chapter 13, you’ll have to pay off all or some of your debt. This article focuses on how a Chapter 13 bankruptcy works.
How Exactly Does a Chapter 13 Work?
If you think that a Chapter 13 is best for you, you must create a realistic budget to get you through the entire repayment process. If you qualify for a Chapter 13, you will have to make a clear and realistic repayment plan, keeping in mind the most favorable terms that are specific to your financial condition and specific circumstances.
You’ll have to then submit it to the bankruptcy court, complete and file the right forms, and wait for approval. The court will also call you in for meetings or hearings that will involve discussions regarding your repayment plan. Your creditors will be asked to attend these as well. Once approved, your repayment plan will commence approximately 30 days after you filed your case in court.
In general, courts allow debtors up to three to five years to pay off their debts. Subject to court approval, you might be able to retain all or most of your property. Your creditors will be required to follow your repayment plan accordingly and won’t be able to collect debts that are not a part of the court-approved repayment plan. Through all this, the court will monitor your progress to make certain that all individuals and/or entities are following the plan. When you have repaid all your debts according to the repayment plan, the court will terminate it and discharge your debts.
Some Crucial Considerations
According to a seasoned bankruptcy attorney in Salt Lake City, a Chapter 13 bankruptcy will require your utmost commitment and involvement than a Chapter 7 bankruptcy case. That said, you must weigh all your options and thoroughly assess circumstances, keeping in mind your income, expenses, and assets when deciding whether to file for a Chapter 13 or Chapter 7. In general, Chapter 13 might be your best recourse if you have regular income, but couldn’t quite cover your monthly expenses and repay your debts on time.