Debtors living in Minnesota may benefit from understanding more about obligations mandated by undertaking Chapter 13 bankruptcy. This form of bankruptcy is designed for debtors who have a regular income. These debtor are afforded three to five years to pay off all or a portion of what is owed. In order to qualify for Chapter 13 bankruptcy, debtors are required to develop a repayment plan that can be approved by a bankruptcy judge.
Debtors with income exceeding the state median during the six months leading to filing for Chapter 13 may be restricted to a five-year plan. If the debtor's income is below the state median, the debtor may qualify for a three-year repayment plan. In order to initiate the process, applicants are required to petition the local bankruptcy court that presides over their respective jurisdiction. Included in the preliminary documents and forms that debtors need to file is information about their income, expenses, assets and a list of creditors.
Debtors are also required to submit their repayment plan proposal, poof of filing taxes for the preceding four years and a copy or transcript of the most recent tax return. In addition, applicants are required provide a certificate of completion from the credit counseling sessions needed to qualify for Chapter 13 bankruptcy. The filing and administrative fees for initiating Chapter 13 bankruptcy may cost close to $300.
People who need to reorganize their debt typically benefit from consulting legal counsel. Lawyers may be prepared to investigate debtors' finances and help identify alternative strategies for mitigating the amount of debt owed to creditors. Aside from providing debt relief, legal counsel may also be effective in protecting debtors from wage garnishments and creditor harassment that is prohibited while the bankruptcy process is underway.