America is suffocating underneath mountains of debt, and the average U.S. household has $134,643 of debt that they need to repay some time in their life. If your finances are simply not in order and you're struggling to make even the minimum payments on each debt, filing for bankruptcy might give you the financial relief you're seeking. If you have some assets under your name and if you have a steady and stable stream of income, you will most likely benefit from filing for bankruptcy under chapter 13. This basically means that you'll come up with a repayment plan that needs to be completed within a certain time-frame. On top of hiring a legal representative, here are 3 tips to ponder when drafting up a repayment plan.
Check to Make Sure that All Creditors Are Included in the Bankruptcy Schedules
Before you file your repayment plan in court, double check the figures to confirm that you have included all of your creditors in the bankruptcy schedules. If you forget to include a creditor and your plan goes through, you will still be responsible for paying back the creditor even after you have completed the repayment plan. This can take a further toll on your finances in the future.
If you've noticed that you've forgotten a creditor, speak with your bankruptcy attorney or trustee immediately to see whether there is still time to file an amendment. You can usually make amendments before your plan goes through by filing in some paperwork and paying a processing fee. Forgetting to include a creditor can give you a false impression on the total amount of debt you owe.
Speak with All Creditors to Negotiate Payment Terms and Amount
One of the benefits of filing for bankruptcy is that you have some leverage when negotiating with creditors, especially unsecured ones. Unsecured creditors are especially vulnerable as they do not hold any security interests in your assets. As a result, they are entitled to very little compensation. Find a bankruptcy lawyer or trustee who is willing to walk you through the negotiation process. In most cases, the attorney or trustee should help you negotiate down your debt by quite a huge chunk. This will help make repaying the debt much less of a burden.
With that said, certain terms and conditions of the repayment plan can also be negotiated with creditors based on your financial situation and your interests.
Crunch the Numbers to Figure Out Length of Time Needed
Everyone wants to complete the repayment plan as soon as possible in order to get back to their normal lives and be debt free. You can take anywhere from 3 to 5 years to complete your chapter 13 repayment plan. If you decide to shorten the time-frame of the repayment plan, you will likely have to spend most of your income repaying your debts, and you won't have a lot of disposable income left. On the other hand, if you stretch out the repayment plan, you might feel a lot more comfortable with the numbers and have much more disposable income to pay for your groceries and other miscellaneous purchases.
Before submitting your plan, sit down and crunch the numbers to figure out if everything works out. You should consider whether you'll be able to save up any funds for a rainy day or for emergencies with the payments that you'll be required to make.
Before submitting the repayment plan and all of the paperwork, double check everything to make sure you are comfortable with the conditions that you are agreeing to. In the event that you fail to complete the repayment plan, your bankruptcy application will be thrown out of court, and you'll be stuck with the same debts as before.
For more information and help, hire a bankruptcy lawyer in your area.