Chapter 13 bankruptcy generally applies to people with a regular source of income. This can be a VERY favorable solution if you are able to show consistent income. This form of bankruptcy allows you to create a repayment plan of all of your debts (money owed). You may have heard of this form of bankruptcy as “Wage Earner Bankruptcy”.
Similar to Chapter 7 bankruptcy, Chapter 13 has a procedure in federal court that begins with the filing of a bankruptcy petition and schedules. However, Chapter 13 bankruptcy is different from Chapter 7 because it allows you to repay some or all of your debt over three to five years instead of completely discharging all your liabilities.
The sooner you take the proper steps to fixing your financial situation, the easier [and more affordable] it will be, so we urge you to contact us now or receive a Free Evaluation.
Are you eligible and how does it work?
Any individual is eligible for Chapter 13 relief as long as your unsecured debts are less than $360,475 and secured debts are less than $1,081,400.
Chapter 13 bankruptcy is often chosen by people who own a house or a car and cannot make their payments. Chapter 13 will prevent a foreclosure or repossession, and allow the person to pay back the amount they are behind. Unsecured debt is also repaid, although it is often at substantially less than 100% of what is owed. If the person in debt completes the plan, they will receive a discharge of the remaining balance on unsecured debt. For the court to approve a Chapter 13 bankruptcy, the person in debt must be employed or have some other source of reliable income to fund the plan.
After your plan is confirmed, there may be some difficulties that prevent you from completion, such as illness, injury, or employment issues. You are able to file for a “hardship discharge” where the court allows you to modify your repayment plan.