When you file for bankruptcy, all of your assets, debts, wages, and supplemental incomes are pawed through and examined. You are expected to show the court everything you have of value that might be used to pay off your creditors. When filing for Chapter 13, the court assumes you can pay back some amount of your debts. How much you will be required to pay will depend on the answers you give to some of the following questions. Being prepared for these questions can go a long way toward helping your case.
Frequently Asked Questions
Chapter 13 is a reorganization bankruptcy. Generally, it is used by individuals who either do not qualify for a Chapter 7 (either due to income or property issues), or who are behind on payments to secured creditors for property they would like to keep (such as home mortgage payments or car payments). It’s for this reason that the court must be made aware of all financial planning moving forward.
What Is Your Disposable Income?
This is the money you will be able to pay back to creditors every month. It is money that is not used for the operation of your company or the living standard of your family. For instance, gas money used to get to work is not disposable income.
How Much Do You Owe?
The amount of debt, to whom it is owed, and the type of loan it is will all be considered. As will any leases, executory contracts, and co-debtors.
What Are Your Assets?
Your assets are not just bank accounts. They are anything that can be sold to alleviate your debt. This includes real estate, personal property, and stocks and bonds.
Are There Bankruptcy Exemptions?
Bankruptcy exemptions are particular belongings you will keep after bankruptcy. These items will not be seized or sold to pay off your debts. From the court’s perspective, these are assets you require to pay back the debt or live a productive life afterward. Items like your house, your car, the tools of your trade, and your retirement benefits go into this category.
Have You Transferred Or Given Property Away?
This is an essential question that a trustee may ask you, and its goal is to find assets you may have stashed with friends or family. Omitting any property that you recently transferred, sold, or gave away is highly discouraged. Being anything but completely honest may cause a court to deny your bankruptcy.
For more information on what to expect from a Chapter 13 bankruptcy, call Natural State Law, PLLC at (501) 916-2878.