One problem that people face when they’re considering bankruptcy is a concern about wage garnishment. That’s why one of the reassuring aspects of Chapter 13 bankruptcy is the protection it offers in regard to being sued or having wages garnished. When you file the bankruptcy, an automatic stay is enforced. It stops all legal action against you — in effect acting like a preliminary injunction against the collection of a debt.
Filing for Chapter 13 bankruptcy — and actually qualifying for it at the end of the process — is not automatic. One important determining factor is your disposable income. The court must be confident that eventually you’ll be able to pay back your creditors. That means that we have to add up all of your regularly incurred monthly expenses. Your total income must be greater than your expenses with some left over — that left over amount is your disposable income.
People often ask me about their privacy when they are considering filing for bankruptcy. Naturally enough, they wonder if their family and friends, or their co-workers, will know about their private affairs. Sometimes people wonder if one type of bankruptcy is more private than another.
Chapter 13 Bankruptcy is a common and effective means of filing for bankruptcy for individuals — as opposed to businesses. I like to say that it is in many ways a form of debt consolidation. It is known as an “individual reorganization,” and for good reason, because it allows you to reorganize your finances, consolidate your debt and then pay back some of it over time.