While the client does not meet the qualifications for filing a Chapter 7 bankruptcy action, there is the possibility of seeking protection in the form of a Chapter 13 filing. The question is whether this approach will make any real impact on the financial condition of the client. As the Chapter 13 Lawyer in Burlington IA will explain, this approach can make all the difference in the world for some people. Here are some things about this type of bankruptcy protection every consumer should know.
How Does It Work?
As the Chapter 13 Lawyer in Burlington IA explains seeking this type of bankruptcy places the debtor under the protection of the court. The goal is not to use assets to pay off as much of the debt as possible and then dismiss the remainder but to provide the debtor with time to repay those debts. Once the action is filed, creditors have the opportunity to review and challenge the amounts they are owed. After the time allotted for this action passes, the court structures a repayment plan that allows for the repayment of the debt in a timely manner.
Each pay period, a portion of the net income of the debtor is withheld and sent to the court. From there, the payments are distributed to the creditors. After the last debt is paid in full, the court considers the bankruptcy fulfilled and releases the debtor from further withholding.
What Happens to the Open Credit Accounts?
Creditors close any accounts included in the bankruptcy to further charges. The debtor should also realize that any accounts with no open balances at the time of the bankruptcy may also be closed. This is most likely to happen if those creditors learn of the bankruptcy action. Since it is possible to amend a Chapter 13 to include new creditors, some will not take the risk.
Remember that bankruptcy is intended to provide relief for people who do not have a reasonable chance of being able to resolve their debt issues in any other manner. For those who believe they have reached that point, visit Cray Law Firm PLC today and arrange to speak with a lawyer. Doing so will be the first step toward moving past the financial difficulties and being able to start over.
