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The rules that apply to Chapter 13 bankruptcy

Bankruptcy is a devastating event in a person’s life but when it is over the individual has an opportunity to start fresh. Depending on the individuals situation the typical declaration is Chapter 7 where assets are liquidated and the proceeds used to pay the creditors or Chapter 13 bankruptcy which allows the individual to keep the bulk of their assets. Chapter 13 allows for paying the creditors’ over a court approved period of time against an agreed upon repayment plan. To qualify for Chapter 13 bankruptcy in Norman OK there are a number of very strict rules that must be followed; the rules include showing evidence that the debts can be paid off, undergoing credit counseling and proving that the accumulated debt, both secured and unsecured does not exceed the limits set.

When an individual decides to declare Chapter 13 bankruptcy in most cases one of the first things that must be done is to undergo credit counseling. During this counseling process the debtor will be advised of what to expect in the future and to determine if they are eligible for declaring this form of bankruptcy. To be eligible the individual must be employed or be the sole owner of a business which generates regular income, this income either from wages or profits must be sufficient to allow for the repayment of a portion of the debt every month for an agreed upon period of time. Chapter 13 sets specific caps on the amount of debt for both secured and unsecured debt.

Once the individual has been declared eligible for Chapter 13 bankruptcy in Norman OK he or she, along with their attorney must first petition the court to indicate that they wish to declare this form of bankruptcy. Along with the petition, the individual must include a current list of all assets and liabilities as well as a statement of their financial position showing income, the names of all creditors, a listing of their property including real estate and their debt position. With this information and a list of monthly personal expenses an amount that can be made available every month can be determined.

Once the bankruptcy has been filed in court all creditors will be notified, at this point in time any harassment by the creditors must cease. A trustee is appointed by the court, the repayment plan is submitted and once agreed by the trustee, the court and the creditors, payments can commence. Payments are usually made over a period of three years but never exceeding five.