A Chapter 13 bankruptcy is the most common type of re-organization bankruptcy filing for consumers. You will be able to keep your property, but you must pay back some portion of your debts over a period of time from three to five years. Whereas a Chapter 7 bankruptcy cancels most of your debts, the Chapter 13 bankruptcy re-organizes your debts into a monthly payment.
Not everyone is eligible for a Chapter 13 bankruptcy. A court may find that your income is too high to qualify for bankruptcy protection or too low to meet the proposed monthly payment obligations. You may also be ineligible due to your total debt burden. Our New Mexico bankruptcy attorneys can review your situation to determine your eligibility. If you are ineligible for a Chapter 13 bankruptcy filing, you may be eligible for a Chapter 7 bankruptcy filing.
What You’ll Need to Do for Chapter 13 Filing
For all bankruptcies, you must receive credit counseling from an approved agency and pay a filing fee before you file. You’ll also need to file numerous forms. As part of a Chapter 13 bankruptcy filing, you must provide a Chapter 13 Repayment Plan that specifies in detail how (and how much) you will pay on each of your debts. Some debts are treated differently than others, and this repayment plan should be prepared by one of our New Mexico bankruptcy attorneys. It is a crucial element in the filing of your Chapter 13 bankruptcy.
The length of your payment plan depends on whether your average monthly income is more or less than the median income for New Mexico. If your income is less than the median, you will have to file a three year plan. If your income is greater than the median, you will have to file a five year plan.
If you are unable to make the payments, a bankruptcy trustee may modify the plan or you may be able to convert to a Chapter 7 bankruptcy. Once you have finished your repayment plan, all remaining debts that are eligible for discharge are canceled.
Chapter 13 bankruptcy filings can be complicated, and it is always important that you obtain counsel to ensure your rights are protected to the best extent under both United States federal and New Mexico state law. Contact our New Mexico bankruptcy attorneys today to discuss your financial situation.