Behind On Your Bills? Have A Job? Chapter 13 May Be For You

December 12, 2012

Behind on your bills? Have a job? Chapter 13 may be for you

With the sluggish economy, many Americans are finding that it is hard to keep current on their bills. As a result, many who are employed turn to bankruptcy for relief from their tough financial situation. For many people in such circumstances, Chapter 13 bankruptcy may be the right solution.

What is Chapter 13?

Chapter 13 bankruptcy, also known as a wage earner's plan, allows debtors with regular income to design a plan to repay all or part of their debts. Under Chapter 13, debtors propose a repayment plan to make regular installment payment over three to five years. Since the repayment of the debt is stretched out over a longer period of time, it can make paying back the debt easier and more affordable.

Advantages over Chapter 7

Unlike Chapter 7 bankruptcy, which requires debtors to give up their non-exempt property in exchange for a discharge of most of the debts, Chapter 13 does not require any property to be handed over. In addition to this, Chapter 13 allows debtors to:
-Save their homes from foreclosure by stopping foreclosure proceedings and repaying delinquent mortgage payments over time
-Lower the payments of other secured debts by extending the payments over the length of the repayment plan
-Stop interest from accruing on credit cards and personal loans

Eligibility for Chapter 13

All individuals with unsecured debts less than $360,475 and secured debts less than $1,081,400 are eligible for Chapter 13 relief. Unsecured debts are debts where the creditor does not have the right to take your property if you fail to repay the debt--such as credit card charges. Secured debt, on the other hand, is where the creditor "secures" the loaning of money by the right to repossess property if the loan is not paid--such as a car loan or mortgage.

In addition, all debtors wishing to file for Chapter 13 must meet certain income requirements. If your income is not high enough, or regular enough, you may be rejected for Chapter 13, because of your inability to make regular payments under the payment plan.

Consult an attorney

Bankruptcy is not for everyone who is facing financial hardship. Depending on your situation, Chapter 13 may or may not be the best bankruptcy choice. As the law surrounding bankruptcy is very complicated and full of exceptions, it is important to seek out the advice of an experienced bankruptcy attorney. An attorney can fully assess your debts and overall financial situation and help determine what debt-relief approach is best for you.

Article provided by Thrush & Rohr LLC
Visit us at http://www.thrushandrohr.com