When you borrow money to buy a house or car, that property generally serves as collateral for the debt you owe. That is, you don’t truly own the property until you pay off the debt, and if you stop paying on the loan then more than likely a process will begin that ends with you giving your property back. If you file for Chapter 7 bankruptcy and owe money on property that serves as collateral, then you will need to choose one of three ways to handle that debt.
Filing for Chapter 13 bankruptcy is a serious matter. That’s why California has established a formal document — the Rights and Responsibilities Agreement (RARA) — that outlines both your attorney’s rights and responsibilities and your rights and responsibilities. You can download a PDF of a document prepared by the United States Bankruptcy Court here.
The RARA is designed to protect you by establishing a flat fee agreement between the attorney and client. It also streamlines the process by allowing the attorney to be paid without doing a supplemental fee application with the court.
There are many complexities to filing Chapter 13 bankruptcies. People often think it’s just a matter of asking, “Do I qualify, and how do I file?”
Those are legitimate questions, but there are many other aspects that you should be aware of if you’re considering Chapter 13. Here are three that you may not have thought of, but should.
High credit card debt can be especially troublesome because so many credit cards charge a very high rate of interest. It can be as high as 20-30 percent on outstanding balances. When this is the case, and a person has maxed out their credit limit, they can go on making minimum payments and never or barely reduce the balance.