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Consider this before filing Chapter 13 bankruptcy

On Behalf of | Aug 7, 2021 | Bankruptcy Law |

Many households in Mississippi have experienced financial problems in the past year. For some, getting things back on track may be as simple as adjusting spending habits or finding ways to earn supplemental income to help make ends meet. Others, however, might determine it best to file for Chapter 13 bankruptcy, although it is a good idea to consider a number of issues before doing so. 

Chapter 13 does not require complete liquidation of assets 

Unlike other bankruptcy options, such as Chapter 7, Chapter 13 does not typically require an applicant to completely liquidate all assets, if any at all. Instead, it is often referred to as a “wage earner’s plan” because a person is usually able to retain ownership of major assets, such as a business or house while continuing to pay back lenders. Chapter 13 is a restructured payment program, so a person considering filing this type of petition will want to make sure that he or she has reliable income available to continue making payments to satisfy his or her debts.  

Amount of debt is another determining factor 

Every type of bankruptcy carries eligibility requirements that must first be satisfied before a person submits an application. For Chapter 13, a prospective applicant must prove that his or her debt is at or below a certain amount. If it is too high, the bankruptcy court overseeing the case might determine that the applicant is ineligible and unlikely to be able to pay off the debt in the required amount of time under a court-approved payment plan.  

Creditors must approve a Chapter 13 plan 

Even if a Mississippi applicant qualifies for Chapter 13 bankruptcy, eligibility alone does not guarantee his or her ability to resolve debt through the program. The creditors in question will have the opportunity to review and, in appropriate circumstances, challenge the proposed repayment plan. Before filing an application, it is helpful to consult with a bankruptcy law attorney, who can review a specific case and recommend which options are most viable to help an applicant accomplish his or her debt relief goals.