A sad fact of today is that more and more households are experiencing financial troubles. Most of us either personally know someone or have ourselves been affected by the recent economic downturn. With state governments running deeply in the red, resulting in further layoffs, furloughs and potential cuts in assistance, these troubles are likely to continue. Even workers who have been fortunate enough to retain their jobs or gain new ones are too often facing crushing debt due to pay cuts or drained savings. Thankfully, those with financial troubles are not without recourse. By filing Chapter 13, you may be able to pull yourself out of debt and still keep the home and belongings you’ve worked so hard to provide.
Chapter 13 is a type of bankruptcy that will reorganize your debt. Unlike other bankruptcy types that can require you to sell off your assets to repay debts, Chapter 13 may make it possible for you to create a payment plan to pay your debt in a more manageable, realistic and fair fashion. Known as “the wage-earner’s plan”, Chapter 13 is often used by those who have income, but find that their current payments outstrip their earnings. By filing Chapter 13, foreclosures on homes or seizure of other assets can be halted. In some cases, portions of your debt can be diminished and even discharged entirely.
While those who file Chapter 7 bankruptcy typically sell their belongings to pay off debt, under Chapter 13 a person uses their income to pay off the debt. Therefore, a filer would need to meet minimum income requirements to be able to make the adjusted debt payments. Additional requirements for eligibility to file exist. For example, currently a filer’s unsecured debt, such as credit card bills, student loans, child support or medical bills, cannot total more than $360, 475. Any secured debt you have, such as a mortgage or car loan, cannot exceed $1,081,400.
As part of Chapter 13 bankruptcy, most filers are required to use the services of a credit counselor approved by the United States Trustee’s office. This person will not only review your debts, but will determine a payment plan that fits your income while meeting the repayment requirements of the courts. Depending on the rules of your state, debt repayment plans typically last anywhere from 3 to 5 years. Since those with mounting debt typically feel helpless, these plans often give filers not just financial relief, but relief from worry and doubt.
While Chapter 13 is an invaluable tool, the laws surrounding it can be complex and subject to continuous changes. For assistance in protecting your assets, contact our bankruptcy attorneys who will help you determine if Chapter 13 is right for you.
About the Author: Jeff Davis is the Owner of the Davis law firm, and a highly experienced attorney in San Antonio Texas. Visit the main site www.jeffdavislawfirm.com learn more about all areas of practice.