Everyone falls on hard times at some point in their lives, especially in periods of economic downturn. In fact, an estimated 1.5 million people will file for bankruptcy this year. If you’re experiencing financial woes, you’re not alone. You might already know that many people in your position file either Chapter 7 or Chapter 13 bankruptcy. For some, filing Chapter 13 bankruptcy is the best option.
Bankruptcy: Chapter 13
Filing Chapter 13 bankruptcy means you are “reorganizing” your debts. It is essentially a debt repayment or consolidation plan. Instead of getting rid of your debts, your debt gets “reorganized” and you repay all monies owed over the course of three to five years.
Benefits of Chapter 13 bankruptcy include:
• The automatic stay – once you file your paperwork, creditors are prohibited from contacting you directly. This is known as the ”automatic stay.” This will stop all harassing phone calls.
• Keep your property – a Chapter 7 filing may require you to forfeit certain assets, while Chapter 13 allows you to keep your property.
• Stop foreclosure – in many cases, filing for bankruptcy Chapter 13 stops the foreclosure process.
• Credit history – a Chapter 7 filing stays on your credit report for 10 years, whereas Chapter 13 only remains for seven years.
• Payment plan – thanks to the payment plan, you may end up making lower payments on certain debts, and you’ll also get to make up missing payments.
For more information about debt repayment options, contact a Chapter 13 bankruptcy lawyer for Chapter 13 help.
Filing Chapter 13: Eligibility Requirements
To qualify for Chapter 7 bankruptcy, your income must be below the state median income. Therefore, if your income is above the state median, you may opt for Chapter 13, as Chapter 13 is known as the “wage earner plan.”According to the U.S. Courts website, “any individual is eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $383,175 and secured debts are less than $1,149,525.”If you have significantly higher debts, you may consider Chapter 11.You might not qualify if you had a bankruptcy filing that was dismissed in the past 180 days or if you failed to complete credit counseling. When filing Chapter 13, always consult an attorney to see if you meet all the requirements.
The basic process for filing Chapter 13 includes filing a petition with a bankruptcy court in your area. You need to file document outlining your current income and expenditures, as well as your assets and liabilities. You need to prove you’ve gone through credit counseling as well. One simple mistake can ruin the entire petition so secure the representation of attorney before beginning the process.
Need Chapter 13 Help?
Only a qualified Chapter 13 bankruptcy lawyer can tell you which type of bankruptcy is appropriate for you, as well as guide you through the bankruptcy process. Bankruptcy laws are complex, so an attorney will tell you where to file your case, how to keep on top of your filing, and ensuring you present all the correct documents.
