Last week, we started discussing how an unforeseen event: divorce, loss of a job, debilitating injury, serious illness, etc. can wreak financial havoc on even the most financially prudent individuals.Some circumstances can rapidly drain bank accounts and push anyone towards the brink of insolvency.
We also explained how those who find themselves in this situation should take comfort in knowing that they do have options, including Chapter 13 bankruptcy. This type of Bankruptcy enables those individuals with regular incomes to pay off all or part of their debts in a monthly payment installment over a period of three (3) to five (5) years. In today’s post, we’ll continue this discussion and examine who qualifies for Chapter 13 together with reasons for some of its advantages.
Who Is Eligibile for A Chapter 13 Bankruptcy?
The bankruptcy rules are relatively straightforward when it comes to whether a person is eligible for Chapter 13 Bankruptcy. Generally, a debtor may file for chapter 13 bankruptcy if their unsecured debts are less than $383,175 and their secured debts are less than $1,149,525.
For those unfamiliar with these terms, a secured debt is essentially one in which borrowed money is secured by some sort of collateral (i.e., a mortgage or car loan), while an unsecured debt is not secured by any collateral at all (i.e., medical bills or credit cards).
As for these monetary thresholds, they are adjusted by the federal government every so often to reflect any fluctuations in the consumer price index.
What Are Some Advantages To A Chapter 13 Bankruptcy?
Some of the primary advantages of filing for Chapter 13 bankruptcy include:
- It allows people to save their homes by stopping the foreclosure process and enabling them to catch up on past-due mortgage payments.
- It allows people to reschedule secured debts (outside of a mortgage) and extend them over the duration of the repayment plan.
- It puts an automatic stay into effect, such that all contacts from creditors must cease.
- It limits interactions with creditors in that a single payment is made to a bankruptcy trustee who distributes it accordingly.
We’ll revisit this topic in future posts. In the meantime, consider speaking with one of our experienced Bankruptcy Attorneys if you have any questions about the fresh start offered in a Chapter 13 bankruptcy. If you have considered filing Bankruptcy or have questions, our Bankruptcy Attorneys would like to meet with you in person to evaluate your case and discuss your options.
Call now to schedule a consultation with our Bankruptcy Attorneys, with absolutely no commitment.