Filing for Chapter 13 bankruptcy protection might be advantageous

June 22, 2013

Filing for Chapter 13 bankruptcy protection might be advantageous

Article provided by Law Office of Eric K. Fox
Visit us at http://www.erickfox.com

Whenever an individual loses income or suffers a major illness, he or she might fall behind on household bills. The situation can be made worse when that person starts receiving threatening phone calls from creditors and bill collectors. Some may start to wonder if there is a way out of their financial rut.

Dealing with financial problems is never easy, and given all the information that is available to individuals, the options may be confusing. Some individuals might find filing for bankruptcy embarrassing; however, bankruptcy may be the right option for some people.

Chapter 13 bankruptcy

According to the U.S. Courts, there are six different types of bankruptcy cases. One of those cases is known as Chapter 13 bankruptcy. Chapter 13 is often used by those who have sources of regular income. Filing a Chapter 13 case can allow for an individual's debts to be adjusted and paid off through a repayment plan over a period of time.

In order for a person to be eligible for Chapter 13 protection, he or she must meet certain criteria. Those criteria require a person seeking Chapter 13 relief to:
-Have unsecured debts that total less than $360,475 and secured debts that total less than $1,081,400
-Received a credit counseling course within 180 days prior to filing a Chapter 13 petition
-Filed a debt management plan with the court if one was created during the required credit counseling

Additionally, individuals should note that they will not be allowed to file Chapter 13 or any other type of bankruptcy case if a previous bankruptcy was dismissed for certain reasons at any time during the preceding 180 days.

The advantages of Chapter 13 bankruptcy

Some people who have excessive debt fall behind on very important bills, like their mortgages. When that happens, they may be faced with the prospect of a home foreclosure. However, if a Chapter 13 bankruptcy filing is made, the foreclosure process might be stopped and the home might be saved. The same applies to those who fall behind on their car payments -- Chapter 13 can help save a car from being repossessed.

Another advantage of filing for bankruptcy protection is the fact that individuals will no longer have to deal with creditors and bill collectors directly. Once a filing has been made, all creditors and collectors are required to cease all communications with that individual. This alone can be very beneficial for those who have found the calls and threatening letters to be stressful.

A Chapter 13 bankruptcy filing can provide a new beginning for those who need a little help with getting back on the right financial track. Those who are interested in finding out more about bankruptcy and how Chapter 13 might benefit them are encouraged to contact a bankruptcy attorney.