What happens if you stop being able to repay your debts and need to declare bankruptcy? There are different types of bankruptcy in America, and one of them is chapter 13 bankruptcy.
What is it like if you want to file for bank ruptcy legally? Read more to find out.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy sets up a payment plan for the debtor. An individual will be able to repay their debts in a span of three to five years. The specific period of time will depend on the debtor’s monthly income, and whether it is above or below the state median.
If you are filing for chapter 13, you will likely need a bank ruptcy lawyer to guide you through the process. You will have to have these details:
- A list of your creditors and how much you owe them
- Your income, source of income, and how often you get paid
- A list of your property
- A list detailing your monthly expenses
A bankruptcy trustee will then set a fixed amount for you to repay every month before distributing that money among your creditors.
Eligibility for Chapter 13 Bankruptcy
You can file for chapter 13 bankruptcy if your secured debts do not reach $1,184,200 or if your unsecured debts do not reach $394,725. You may not be able to file for bank ruptcy if you have tried before and the petition did not come through.
The process of filing for bank ruptcy can be a challenging one, and you will essentially have to convince the court that you can no longer attempt to repay debts in your current situation. This is why it is helpful to hire a chapter 13 bank ruptcy attorney to help with the process.
Advantages of Filing for Chapter 13 Bankruptcy
You may be wondering: why file for chapter 13 bankruptcy at all? This is because there are several benefits that arise when you do so.
You Pay As Much As You Can
When you file for bankruptcy, the court will evaluate your case and settle your required monthly payments based on your current financial situation. If it doesn’t seem as if you will be capable of paying back all your debts, the court will take this into account and settle on a realistic repayment plan.
Your Debts Can Be Discharged
So what happens if your debts are too numerous for you to repay? This happens to a lot of the individuals who file for bankruptcy. You can get your debts discharged if you are incapable of repaying them.
This means that you can completely start over without having a numerous mountain of debt looming over your personal finances!
Filing for Bankruptcy Under Chapter 13
If you have been struggling to repay your debts, you may want to file for chapter 13 bankruptcy. This will enable you to have a new repayment process over the course of three to five years. If you can’t afford to pay everything off, you may even get your debts discharged!
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