If you need to file for bankruptcy, it’s important to understand what the process involves and how to file for Chapter 13 bankruptcy. Chapter 13 is one of many different plans that allow individuals to manage their debt in a way that is best given their situation including income and current debts. Here is a breakdown of the chapter 13 process, and what everyone should know before they get started.
How to File for Chapter 13 Bankruptcy
1. Understand What Chapter 13 Is
Chapter 13 is a form of bankruptcy that gives individuals the chance to be relieved of their debts. In some cases, debts are totally dissolved, but often there is a payment plan. Here, the individual is given a certain amount of time to pay all their debts back. Usually, these debts are consolidated into one, meaning there is less money since the individual isn’t paying interest on several different bills. Before deciding if this is right for you, speaking with an attorney is the best bet, to determine what is needed. An attorney can help individuals who have questions, need advice, and are seeking representation because they are being sued for money they don’t have.
2. Come Prepared
In the case of bankruptcy, there is always a lot of paperwork, regardless of how much money is owed. Be aware that you’ll need information related to the following items:
- The amount of money you are being sued for
- A list of companies you owe money to, and how much they are for
- Income statements in the form of paystubs, or self-employment earnings, including previous years taxes
- Statements from banks, credit cards, student loan companies, and other places that have set amounts of money they expect you to pay each month
If you are not prepared, you simply must go back and find all the requested documentation. This just makes the process longer and more time-consuming than most people would like. Having said that, it is better to simply get together everything you need and come to the table ready to work out the financial issues at hand.
3. Get Ready for Counseling
As part of the process for filing a Chapter 13, everyone must have a counseling session where they learn what exactly this form of bankruptcy entails. Some people may think another chapter is better for them when it really isn’t, or be confused about what to do when filing. Others may think it is the only way to get anything done, and not realize that based on their income, there are other choices they can make.
4. Know There Are Ways to Handle Your Situation
Although many people don’t enjoy finding themselves in this situation, there are ways to alleviate the pain. Most folks find that the restricted amount of spending they can do now that they have filed is frustrating. While you are dealing with the adjustment of paying down you’re the consolidated bills from your bankruptcy, learn about creative ways to save money. This is as simple as planning our meals, so you aren’t going out and spending money on fast food, to learning about creative ways to make cloth training pants for your children. Just because you must make an adjustment and focus on paying off your debt doesn’t mean you should put a hold on your life. Above all, be aware that there are ways to get a handle on your situation, and save money at the same time.
Filing for chapter 13 bankruptcy doesn’t have to be the end of the world. Once you understand what the process entails, and how to file for Chapter 13 bankruptcy, you’ll be able to adjust to your life and plan ahead. Filing prevents people from suing you for new debts. It also helps you realize how to get ahold of your spending problem. If you need to file on account of difficult circumstances, such as divorce or medical bills, then you can manage those once you file. If you’re worried about not having enough money for your consolidated debts, consider simple ways that you can save money at home.
Alternatively, search for ways to make money, such as an additional part-time job, or taking on another job while working from home. This gives you extra wiggle room and makes your life easier as you pay off the debts. Once you do, you’ll never have to worry about anything from your previous bankruptcy.
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.