Chapter 13, also known as the wage earner plan, is a type of bankruptcy that allows individuals to retain their assets while they are getting out of debt. All chapters of bankruptcy serve individuals and businesses that are overwhelmed by debt. Bankruptcy also protects them from debt collections, wage garnishments and lawsuits during the bankruptcy proceedings. Bankruptcy protection chapter 13 helps you reorganize and repay your debts without creditors harassing you.
Understanding Chapter 13 Bankruptcy
The federal court can consider Chapter 13 bankruptcy a debt consolidation repayment plan. The main objective of bankruptcy protection chapter 13 is to consolidate all of an individual’s debt into one repayment plan. The individual then makes the required monthly payment to a court appointed trustee. The trustee then distributes the payments to the creditors through installments that can last from three to five years. The courts never extend payment plans more than five years.
The Benefits of Filing for Chapter 13
There are several benefits that individuals are offered under Chapter 13 that are preferred over the liquidation of assets that occurs under Chapter 7 bankruptcy. Perhaps one of the most significant benefits is that the court can stop foreclosure proceedings. And, the individuals can pay late payments over a period of time. However, the individual must continue to make mortgage payments on time during the plan.
Another benefit of filing Chapter 13 is the plan allows individuals to reschedule secured debts. Then, the individual can make the payments during the life of the bankruptcy plan.
Bankruptcy Protection Chapter 13: Who Is Eligible To File?
Any individual can file for Chapter 13 protection if their unsecured debts are currently below $383,175 and secured debts are currently below $1,149,525. Keep in mind that these amounts are subject to change. To get accurate information before you file, consult with an experienced bankruptcy attorney in your area.
Individuals are not eligible to file any chapter of bankruptcy if they have had a prior bankruptcy petition discharged. The court must have dismissed the petition based on if the debtor failed to appear, failed to comply with the court’s instructions or voluntarily dismissed their petition.
When seeking bankruptcy protection Chapter 13, there are many things that an individual will need to keep in mind to ensure the court approves the filing. Instead of trying to handle the process on your own, hire a knowledgeable and reputable bankruptcy attorney.
Do you want to know if you are eligible to file for Chapter 13 protection? Contact Douglas Jacobson Law Firm for a free consultation.