Known as a “wage earners” bankruptcy, Chapter 13 bankruptcy is a reorganization of your debts, with better terms negotiated through the court system to help you with repayment.
Unlike Chapter 7, which is more severe and which wipes out many types of debts completely, Chapter 13 is designed for people who have a steady income and are able to pay on their debts but are struggling under the pressure from creditors or are unable to make payments due to high interest rates.
Many people initially believe they want to file for Chapter 7, but are deemed to have enough income such that their case is converted to a Chapter 13 so that they can repay their debts. The court’s interest is in repaying creditors what they are owed if that is at all possible.
Chapter 13 is not for everyone. There are limits to how much debt you can have and still be eligible for Chapter 13. Unsecured debt, such as credit card debt, can be no more than $394,725, and secured debts, such as a house or other real property, and/or a car or other automobile, cannot exceed $1,184,200.
You also have to prove you have enough stable income to be able to make the payments necessary to repay your debts. If you meet all those requirements, Chapter 13 may be an option for relief.
The process begins with a credit counseling session, and then you enter into a repayment plan.
Certain types of debts have to be paid before others, such as tax debt, child support, and alimony.
You also must keep current on payments on your secured debts, such as your mortgage and car payments.
If you have sufficient income after these expenses to pay your creditors, that money will be used for repayment. Most creditors can repay all of their debt in 3-5 years in a Chapter 13 repayment plan.
FL Legal Group has considerable experience representing individuals in all types of bankruptcy matters, including Chapter 13. With our assistance, you can gain control of your financial situation again and pay off the debts that you owe. A fresh start is possible. We can help call 1-800-984-9951 or click here to contact us today.