Chapter 13 bankruptcy, also known as wage earner’s bankruptcy, is a type of bankruptcy that allows individuals to repay their debts over a period of three to five years under a court-approved repayment plan. Chapter 13 bankruptcy can be a good option for people who have too galadaritradings.com/ much debt to qualify for Chapter 7 bankruptcy or who want to keep their assets.
How does Chapter 13 bankruptcy work?
When you file for Chapter 13 bankruptcy, you will need to develop a repayment plan with your bankruptcy lawyer. The plan will detail how much you will pay to your creditors each month and how long it will take you to repay your debts.
Your repayment plan will be based on your income and expenses. You will need to commit to paying all of your disposable income to your creditors until your plan is complete.
Who is eligible for Chapter 13 bankruptcy?
To be eligible for Chapter 13 bankruptcy, you must have a regular income. You must also be able to develop a repayment plan that will repay all of your priority debts in full and a portion of your unsecured debts.
What are the benefits of Chapter 13 bankruptcy?
Chapter 13 bankruptcy can provide a number of benefits, including:
- Stop foreclosure and repossession: Chapter 13 bankruptcy can help you to stop foreclosure on your home and repossession of your car.
- Reduce monthly debt payments: Your Chapter 13 repayment plan will be based on your income and expenses, so you may be able to reduce your monthly debt payments.
- Pay debts over time: You will have three to five years to repay your debts under your Chapter 13 repayment plan.
- Keep your assets: You may be able to keep your assets under Chapter 13 bankruptcy, even if you have nonexempt assets.
What are the drawbacks of Chapter 13 bankruptcy?
Chapter 13 bankruptcy also has some drawbacks, including:
- Credit score damage: Filing for Chapter 13 bankruptcy will damage your credit score for up to seven years.
- Commitment to repayment plan: You must commit to paying all of your disposable income to your creditors until your repayment plan is complete.
- Difficulty completing repayment plan: If you miss any payments or have a change in income, you may be able to modify your repayment plan, but it can be difficult to complete the plan successfully.
Should I file for Chapter 13 bankruptcy?
The decision of whether or not to file for Chapter 13 bankruptcy is a personal one. You should weigh the benefits and drawbacks of bankruptcy carefully before making a decision.
If you are considering filing for Chapter 13 bankruptcy, it is important to speak with an experienced bankruptcy lawyer. A bankruptcy lawyer can help you to determine whether you are eligible for Chapter 13 bankruptcy and can represent you in court.
Conclusion:
Chapter 13 bankruptcy can be a good option for people who want to keep their assets and who can commit to a repayment plan. However, it is important to weigh the benefits and drawbacks of bankruptcy carefully before making a decision. If you are considering filing for Chapter 13 bankruptcy, you should speak with an experienced bankruptcy lawyer.