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The rules for filing under Chapter 13

On Behalf of | Jan 9, 2020 | Chapter 13 Bankruptcy

Connecticut consumers can file for Chapter 13 bankruptcy regardless of their income. However, they must have no more than $1,257,850 in secured debts and no more than $419,275 in unsecured debts at the time that they file. Those who are looking to file for Chapter 13 bankruptcy will also need to verify where their income comes from, and it will be necessary for a debtor to show that he or she has filed all necessary income tax returns for the past four years.

The first step in the Chapter 13 bankruptcy process is to take a credit counseling course from an approved provider. After completing that step, the next task is to create the repayment plan that will be used throughout the repayment period. In a reorganization bankruptcy, debts will be repaid for either three or five years depending on how much income a person has.

At the end of the repayment period, it may be possible for unpaid debt balances to be discharged. In some cases, debtors may be able to obtain new loans during their repayment periods. However, the bankruptcy court will need to approve any request to take on new debt while paying down current outstanding balances. Furthermore, there is no guarantee that a given lender will want to work with someone with an open bankruptcy case.

Individuals who are interested in obtaining debt relief may want to learn more about filing for bankruptcy. After doing so, it may be possible to obtain an automatic stay of creditor contact. This may prevent creditors from calling or sending debt collection letters until the bankruptcy case is over. An attorney may help a person learn more about the potential benefits of bankruptcy and the eligibility requirements.