Posted on: 30 August 2021
Do you have a lot of debt that you are looking to get rid of, and are you currently considering bankruptcy to do it? If so, you're likely debating between Chapter 7 and Chapter 13 bankruptcy. Here is what you need to know about Chapter 13 bankruptcy to decide if you should use it.
Chapter 13 May Be Your Only Option
One thing to be aware of is that Chapter 7 bankruptcy may not even be an option for you. That is because there are income requirements to qualify for Chapter 7 bankruptcy, and if you make too much money, it will not be allowed. That's why it's worth talking to a bankruptcy lawyer to look at your finances and figure out which form of bankruptcy you qualify for, which can save you the trouble of debating between two options when one is not possible.
Chapter 13 Requires A Repayment Plan
The reason that you may be forced to use Chapter 13 bankruptcy is that Chapter 7 completely discharges your debts that qualify for low-income individuals. Chapter 13 arranges for debt consolidation with a payment plan for those that can afford it, where you may only pay a fraction of your debts based on what you owe.
Keep in mind that you may make so much money that you actually need to pay back 100% of the debt that you owe. The reason that you would still want to move forward with bankruptcy is that the interest on these debts will stop accumulating. Chapter 13 bankruptcy will finally make it possible to catch up on your debts and not fight against the interest that is owed.
Chapter 13 Lets You Keep Your House
If your house is close to being foreclosed on, know that Chapter 13 bankruptcy will let you keep your home. Not only will you receive an automatic stay after you file that lets you stay in your home while the bankruptcy is being figured out, but you won't have to make all those back payments toward your mortgage as one large lump sum.
Chapter 13 bankruptcy allows you to spread out those missed mortgage payments over the length of the repayment plan, which could be anywhere between 3 and 5 years depending on the type of repayment plan you have. This allows you to slowly make up those missed payments in a way that is more manageable for you and your family.
Talk to a lawyer to learn more about bankruptcy law.Share