If you are considering bankruptcy, you need to determine the best option for your situation. Deciding bankruptcy is the correct way to resolve your financial turmoil is a serious decision. Chapter 13 bankruptcy, also known as a wage earner’s plan, could be the right choice for you if you are eligible and weigh the benefits. Before you make your final choice, learn how filing chapter 13 bankruptcy could work for you.
Rather than the liquidation aspects of other bankruptcies, chapter 13 is a restructuring option that allows business owners to continue their operations. Debtors have the ability to keep their business up and running while developing plans to restructure finances. Small business owners who operate a sole proprietorship can benefit from keeping their property.
Save your home
Employed homeowners facing foreclosure or mortgage delinquency can benefit from chapter 13 bankruptcies. If you have fallen behind on your mortgage payments, you can resolve your missed payments and eliminate a portion of debt through chapter 13 bankruptcy. It is possible to keep your home and have the ability to get rid of some credit card debt and medical debt.
Handling secured debt
If you have secured debt, such as a car loan or non-primary mortgage, you can reschedule the debt over the duration of the bankruptcy. You also have the option to surrender your secured debt to the creditor. When surrounded, the owed amount becomes an unsecured debt that must be paid with your other unsecured debt.
Plan approval and proceedings
Chapter 13 bankruptcies typically have an efficient approval process. Most chapter 13 bankruptcies require a commitment duration that can last between three to five years. During this period, all disposable income must be surrendered to the trustee, who then distributes it to creditors. If unsecured creditors are fully paid, the commitment duration can be shortened.
If you decide to pursue chapter 13, you need to include the following details in your form:
- A list of creditors, owed amounts and nature of claims
- The amount, frequency and source of your income
- A list of your property
- A thorough list of monthly living expenses, including but not limited to food, clothing, utilities, transportation and healthcare
If you are married, keep in mind that you must include your spouse’s information even if you are the only one filing.
Resolving your financial situation is possible if you make the right choices. Learn more about chapter 13 bankruptcy and how an experienced lawyercan help you get back on track.