Even the most hardworking people can face unexpected financial challenges. A sudden job loss, a medical emergency or an economic downturn can quickly turn a stable financial situation into a struggle with mounting debt. However, options exist to help one regain their financial footing. Chapter 13 bankruptcy is one such option.
Chapter 13 bankruptcy is a type of bankruptcy that allows people to propose a repayment plan that lasts anywhere between three and five years, during which they can pay off all or a portion of their debts.
What issues can a Chapter 13 bankruptcy help address?
Filing for a Chapter 13 bankruptcy can be a practical choice if you:
- Have a steady income but overwhelming debt: Chapter 13 allows you to combine your debts into a single, more manageable monthly payment.
- Face potential loss of property: When you’re in danger of losing your home to foreclosure or having your vehicle repossessed, Chapter 13 bankruptcy can initiate an “automatic stay.” This provision promptly stops any ongoing foreclosure or repossession actions, giving you a chance to address your financial situation.
- Are behind on mortgage or car payments: If you’ve fallen behind on your mortgage or car payments but want to keep your property, Chapter 13 offers a way to spread out the past-due amounts over the life of your repayment plan while continuing to make current payments.
- Want to keep valuable assets: Unlike Chapter 7 bankruptcy, Chapter 13 doesn’t require you to sell your property. This can be particularly beneficial if you have assets that exceed your state’s exemption limits, such as a home with significant equity, a car or non-exempt investments.
To qualify for Chapter 13 bankruptcy, your total debts should be less than $2,750,000, and you need a steady income to support a 3-5-year repayment plan. Moreover, you must complete credit counseling from an approved agency within 180 days before filing, with some exceptions for emergencies.
Note that you may not be eligible if you’ve had a bankruptcy case dismissed in the last 180 days due to failing to appear in court or follow court orders.
This may be a path to financial recovery
If Chapter 13 bankruptcy seems like a potential solution for you, don’t hesitate to reach out to a bankruptcy attorney. They can assess your specific situation and guide you through the legal process.
