The more debt you have, the harder it is to manage. When you lose track of or are unable to keep up with your scheduled payments, lenders and creditors may reach out to you and inform you that you are in default of your loans. If you can’t repay your lenders, you may have to consider alternatives like bankruptcy. There are different types of bankruptcy including Chapter 13 bankruptcy. This is a common type of bankruptcy that is often considered less detrimental than other forms of traditional bankruptcy. Find everything you need to know about Chapter 13 bankruptcy below. Call to set up a free consultation with us today.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as wage earner’s plan, is just one type of bankruptcy that you can file. It is often called the wage earner’s bankruptcy plan because of how it is structured. When you file for Chapter 13, people who have a regular income can develop a specific plan to repay some or all of their debts. This plan often ranges between three and five years depending on the amount of income you make compared to the average income of your state. One major benefit of Chapter 13 bankruptcy is it allows you to bypass home foreclosure. However, if you opt for Chapter 13, you’ll be under the supervision of a court-appointed trustee who will ensure your payments are collected and distributed.
Eligibility
Individuals who are eligible for Chapter 13 bankruptcy depend on their employment and their income. Essentially, if you are working, self-employed, or operating a business and are in debt you should be eligible for Chapter 13 bankruptcy. Also, the amount of debt that you have matters. To be eligible, you should have less than about $390,000 in unsecured debt and $1.1 million in secured debt. It’s important to note that if you’ve previously filed a petition for bankruptcy and failed to appear in court.
How to File
The first step of filing for Chapter 13 bankruptcy is making sure you understand the ins and outs of what you’re getting into. Because bankruptcy is often a difficult process, hiring an attorney might be a great choice for you. They’ll introduce you to Chapter 13 and walk you through the filing process. In terms of filing, a petition must first be filed with a bankruptcy court. This includes a petition for bankruptcy, a schedule and assets of liabilities, your current income schedule, a statement of financial affairs, and a list of all of your creditors and associated schedules. If approved, a repayment schedule will be created and you’ll be assigned a trustee who will ensure that all of your payments are collected.
Alternatives
It’s important to note that filing for Chapter 13 bankruptcy in times of financial strain is not the only option for mitigating your debts. Alternatively, other types of bankruptcy like Chapter 7 and Chapter 11 exist. Talking to an attorney that specializes in bankruptcy can help you determine which option is best for you. Other options to avoid bankruptcy may include settling with your lenders or debt consolidation.
Hire an Attorney Today
If you’re unsure of whether you could benefit from filing for Chapter 13 bankruptcy, an experienced attorney can explain the process in more detail. The Foreclosure Defense Group is a top-rated team of attorneys who can help you through this difficult financial process. Call us to schedule a consultation to discuss what financial options are best for you today.