The one main question we get when people call in about bankruptcy is, how does bankruptcy work? If you are facing financial challenges, you may have thought about bankruptcy, but you do not know where to start.

Unlike a Chapter 7 bankruptcy, where most debts are discharged, Chapter 13 bankruptcy is a repayment plan which proposes to the court to pay back some or all of your outstanding debt to creditors. In most cases you will only pay back a portion of the outstanding debt to creditors. In a Chapter 13 bankruptcy a 36 to 60 month payment plan is proposed to the court to repay your debt. A 36 month plan is proposed to the court if your gross income is below the median income for your state. If your gross income is above the median income for your state, then a 60 month payment plan will be proposed to the court.

When you file for Chapter 13 Bankruptcy, a bankruptcy trustee will be appointed to administer your case. A Chapter 13 trustee is a third party who administers your bankruptcy plan payments to your creditors according to your repayment plan. Dealing with a trustee in bankruptcy is one of the steps in the process. The trustee will review your income, debt, your proposed bankruptcy plan and then collect and distribute your payments according to the plan. About 30 days after you file the bankruptcy, you will have a hearing with the trustee to go over your plan and will ask you questions to ensure all the information filed is accurate.

Once you complete your repayment plan term, then the remaining dischargeable debt that was not paid back during the term of your plan will be discharged. This means that you will no longer be personally liable for the payment on these debts. Debt that is considered non-dischargeable would continue to be repaid by you after the bankruptcy is completed.

At DAL Law Firm, we understand that you’re facing a challenging time. Filing and going through bankruptcy can be complicated and frustrating. Attorney Darcel Lobo can help you successfully navigate the process and get a fresh start. If you have questions about bankruptcy, call our office today at (206) 408-8158 and schedule a free bankruptcy consultation to see if it may be a right fit for you to relieve you of your financial stresses.

We are so pleased to announce that Darcel Lobo, the owner and attorney at DAL Law Firm, has created Your Planning Coach, a financial coaching business to help people after their bankruptcy discharge. If you’d like help getting started with planning your finances after bankruptcy, here is a great guide you can use: Budget After Bankruptcy Guide.