Are You Eligible For Chapter 13 Bankruptcy?

If you are experiencing financial hardship, it would be best to consider filing for Chapter 13 bankruptcy to eliminate your debt. Choosing to file for Chapter 13 bankruptcy does not mean that you clear your debt and forget everything. Be reminded that you commit to a bankruptcy repayment plan that can last up to five years, depending on what is agreed upon in court.

Understanding the difference between chapter 7 and chapter 13 bankruptcy is crucial in making the most informed decision for your financial future. There are many debts under Chapter 13 bankruptcy that are recognized and can be repaid over three to five years by an individual which allows them to have a fresh start. Filing for Chapter 13 bankruptcy and being given a court-approved repayment plan is sometimes the best course of action.

The Difference Of Chapter 7 and Chapter 13 Bankruptcy

Chapter 7 bankruptcy is referred to as liquidation bankruptcy, and the proceeding will liquidate non-exempt assets and properties to meet your debt obligations. A bankruptcy trustee will analyze the debtor's assets for potential sale, the proceeds are brought to pay back creditors. Not everyone is eligible for Chapter 7 bankruptcy since income requirements have to be met.

Chapter 13, on the other hand, restructures your debts into a bankruptcy repayment plan that you must strictly abide by. It is a voluntary reorganization of your debt. Instead of paying unsecured creditors, the entire balance is owed in your account, and you are tasked to pay for it through a small percentage over time. Once the debt is repaid, the debt is discharged and forgiven.

What Is A Chapter 13 Repayment Plan?

Before deciding to file for a Chapter 13 bankruptcy, it is crucial to understand that you must be capable of paying the new monthly plan provided once it is filed. You must also be given a complete overview of how it will affect your financial status and if the repayment plan will provide relief or be an added burden.

Although not all debts can be settled through filing for bankruptcy, filing can stop foreclosure of properties, repossession, wage garnishments, debt-collection lawsuits, and even collector harassment. Filing bankruptcy can provide you with added time to catch up on your payments while settling what is needed.

Bankruptcy Exemptions

Bankruptcy exemptions protect the equity of your asset from being foreclosed and repossessed. It is a choice to utilize federal bankruptcy exemptions as long as you understand its limitations and restrictions.

These exemptions cover a variety of assets, and it is not limited to real estate alone. Homes, vehicles, clothing, personal property, business equipment, retirement accounts, and health aids are exempt as long as they are filed under Chapter 13. Married couples can even double the amount of exemptions if both agree and file for bankruptcy.

Bankruptcy exemptions and calculations can vary periodically; therefore, it would be best to have the most current figures before filing to calculate the best possible bankruptcy plan.

How Often Can You File For Chapter 13 Bankruptcy?

There is no limit as to how frequently you can file bankruptcy Chapter 13. For as long as you see the need to file bankruptcy, the system will allow you to do so provided you abide by the rules of The U.S. Bankruptcy Code.

Time limits are based on what Chapter you file under. You are eligible to file for Chapter 13 bankruptcy two years from the day you filed the previous bankruptcy case (not the date of the bankruptcy discharge or bankruptcy stay). These limits are in place to prevent abuse of the system. 

Advantages Of Filing Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy will provide you with several advantages such as:

• No interest on credit card debt.
• No interest in penalties on tax debt.
• Prevention of mortgage default and loss.
• Potential elimination of lien debt brought by a second mortgage.
• Reduced interest rates on secured loans.
• Reduced amount of collateral.
• Keep the property you are paying for
• Eliminates dealing with creditors directly because your trustee will be in charge. 
• Activation of automatic stay which prevents collection harassment

The timetable provided by Chapter 13 also allows you to extend the payment period of your debt with less worry about creditors breathing down your neck.

Disadvantages Of Filing Chapter 13 Bankruptcy

The most significant disadvantage of filing for bankruptcy is that you are still paying debts, although the pressure to liquidate your assets is no longer present.  There are other downsides to filing Chapter 13 as listed below:

• It takes longer to get a bankruptcy discharge because you need to stick to the repayment plan of three to five years. 
• All extra cash should go to the settlement of debts. 
• You will have to do away with your credit cards.
• Your Chapter 13 bankruptcy filing will be on your credit report for up to 10 years.
• You will still have to pay nondischargeable debts like spousal support, child support, back taxes, or student loans.
• It will be harder for you to file Chapter 7 bankruptcy after a Chapter 13 filing. 

Hiring A Chapter 13 Bankruptcy Lawyer

Take care of your finances and reclaim the life you deserve. Your debt should not dictate your existence. Therefore, it would be best that an experienced bankruptcy chapter 13 lawyer represents you.

Some individuals who file for Chapter 13 bankruptcy experience relief after doing so since it relieves them of stress from constant collection efforts done by their creditors. Chapter 13 bankruptcy puts a pause on your debt collection and provides you with a simpler repayment plan that aids your fresh start.

Choosing the Law Office of Jeffrey B. Kelly to help you in your bankruptcy filing is a smart decision. Our law firm has been helping clients handle their bankruptcy concerns for the past 22 years. Our bankruptcy attorneys will personally handle your bankruptcy filings, from start to finish. Talk to our competent attorneys now.