If your income is too high or have too many assets to file for Chapter 7 bankruptcy but are drowning in debt payments every month without any relief in sight, then filing for Chapter 13 bankruptcy protection is likely the best answer. When you file a Chapter 13 bankruptcy petition, you are asking the courts to put all of your debts into one big pot, and then you make one large monthly payment each month for up to five years. Once the agreed on payments have all been made, then the rest of your debt is discharged.
To ensure your Chapter 13 bankruptcy case is successful, do each of these three important things:
1. Avoid Favoring Your Friends or Relatives When Repaying Debts
One of the worst things you can do before filing for bankruptcy protection is to skip paying your credit cards or other consumer bills and instead repay loans to friends or family members. When the court looks at your financial habits during the months before you filed your case, they will look at who you chose to make payments to. The court does not appreciate people repaying personal loans over other debt obligations. In the court's eyes, if you can't pay your Visa, then you shouldn't be paying your aunt back for her loan, either. If the court sees this type of debt repayment in the months leading up to your case filing date, then they will view this as fraudulent.
2. Obtain the Court-Required Credit Counseling Certificate by the Deadline
As part of your Chapter 13 bankruptcy filing, you are required to attend a credit counseling session. During this session, you will be educated about monthly budgets and other strategies you can use to avoid getting underwater with your finances in the future. Thankfully, you can attend the credit counseling session online from the convenience of your home and then print the certificate when you complete it. If you and your spouse are both filing for bankruptcy, then you both need to complete the course and obtain your own certificates.
3. Hire a Lawyer Who Specializes in Chapter 13 Bankruptcy Cases
As one last point, it's important you hire a lawyer to represent your interests who specializes specifically in Chapter 13 bankruptcy cases. Since bankruptcy cases are processed through the federal court system, they have a lot of special rules and laws your Chapter 13 bankruptcy lawyer will need to know to get you the protection and ultimately the debt discharge you deserve.