If you’re considering filing for bankruptcy, you already have a lot on your mind, so it can seem impossible to navigate the jargon of not only the banking world, but the legal world as well. We can all benefit from a bit of a refresher course on what exactly each type of bankruptcy is and how it can be applied to your situation, so in this post, we’re going to go over chapter 13 bankruptcy: what it is, how to go about it, and how to turn it into a new beginning.
Chapter 13 bankruptcy is also known as a wage earner’s plan, and that tells you a little bit about how it works. Chapter 13 bankruptcy is for people who are still earning a regular income and can thus afford to make monthly payments to a creditor for a span of 3-5 years. The number of years you have to spend paying your debts depends on your current income, but the plan cannot extend for more than 5 years.
When we talk about filing for bankruptcy, we rarely discuss what form of bankruptcy someone has filed for, so not everyone knows just how much it matters to choose the right bankruptcy plan for you. Each has their own unique advantages, disadvantages, and stipulations. Chapter 13 is a useful for plan for those who really don’t want to risk foreclosure on their homes. This is usually utilized by families, especially those with young children, that don’t want to risk too much change or having to completely uproot their lives. Chapter 13 affords the possibility of keeping your home by giving you a period of time to pay off your defaulted mortgage payments (within a reasonable time period). Though you have to make those payments, you can know with concrete certainty that your home won’t be foreclosed upon.
Eligibility for a chapter 13 bankruptcy claim is dependent on your status as an individual, as well as the amount of debt that you have. The amount of debt that you have cannot exceed the limits set by the bankruptcy law, and these limits change once every three years. As of April 1st, 2016, your unsecured debts must be less than $394,725 and your secured debts must be less than $1,184,200. These amounts may seem random, but are in fact based on the calculated consumer price index at the time.
For more information on chapter 13 bankruptcy and how it might be able to work for you, contact your Boca Raton bankruptcy attorneys today!