The downturn of the economy in recent years has put many people in financial disarray. These uncertain times have left many searching for a viable option for a fresh start from insurmountable debt. For many,filing for bankruptcy is that option. From unsightly mortgage payments to unforeseeable medical bills, the reasons for filing bankruptcy are as diverse as those who file. The different types of bankruptcy, however, are not available to everyone.
FILING FOR CHAPTER 13 BANKRUPTCY IN OKLAHOMA
Unlike a Chapter 7 filing, where an individual’s assets are collected and sold to repay debts, filing Chapter 13 bankruptcy introduces a repayment plan for the debts while the filer retains his property. In order to file under Chapter 13 of the United States Bankruptcy Code, the debtor must meet certain standards to provide proof of his ability to make payments to his creditors.
Chapter 13 is a type of bankruptcy designed to protect individuals with a steady job and income. Often referred to as a ‘wage earner’s plan,’ the proposed repayment plan is presented to the court for approval. If the plan is accepted by the creditors, the payments are disbursed to the creditors monthly throughout a 3-5 year period. Once the payment plan period has ended, the filer’s debts are repaid and the case is closed. With debts wiped clean, a Chapter 13 filer receives the fresh start from overwhelming financial turmoil that bankruptcy is designed to provide.
According to the New Bankruptcy Law effective October 17, 2005, those who can afford to make payments towards their debt can do so while still maintaining the right to have the rest of their debt erased by filing for bankruptcy under Chapter 13. The new law uses a means test to identify debtors with the ability to make sufficient payments on their debts over a period of time.
To satisfy the means test and therefore be eligible for a Chapter 13 filing, a debtor must earn above the median income for his state and either have an excess monthly income of more than $166.66 to pay $10,000 of debt over 5 years, or have an excess income of greater than $100 per month to pay over the next 60 months at least 25% of his unsecured debt. Unsecured debts are debts without tangible property attached to them, such as medical bills or credit cards. If the debtor meets these requirements, he is qualified to file for bankruptcy under Chapter 13.
Whether it be to prevent home foreclosure, the repossession of a vehicle, or harassing creditor calls, Chapter 13 bankruptcy is appropriate for people who have a sincere desire to pay off their debts and can feasibly achieve this within 3-5 years by earning a sufficient wage.
If you are one of the many people now dealing with financial hardship, experienced Oklahoma City bankruptcy lawyers can help determine if you meet the criteria for Chapter 13 bankruptcy protection. Consult them today for more information.