Financially, you happen to be in a quagmire. You risk losing your home, car, and even personal belongings. Well, that doesn’t have to happen. There are repayment plans capable of handling the numerous debts you owe and can even get you back on your feet within a few years, no matter how deep in debts you’re stuck in and no matter the financial mistakes you might have made in the past.
WHAT IS A CHAPTER 13 BANKRUPTCY?
A Chapter 13 bankruptcy which is also known as a Wage Earner Plan is a repayment method backed up by legal order to enable a debtor to repay his creditors with specific and customized payment plans through a trustee for a fixed period. Need to file a chapter 13? The Pope Firm bankruptcy lawyers in Knoxville is my recommendation.
HOW DOES A CHAPTER 13 WORK?
The process of chapter 13 isn’t exactly difficult and intricate as it may appear. It is quite simple to understand. Chapter 13 could be explained in these five steps below:
- The debtor files an insolvency form,
- Sends to the court, along with a proposed payment method, the court approves
- The debtor makes a monthly payment to a chapter 13 trustee
- The debtor makes payments over three to five years, but never over five years
- The chapter 13 trustee distributes payments to all creditors.
However, intricacies may occur as per the facts of the case. It is always prudent to seek the advice of a legal expert when seeking bankruptcy.
CAN A CHAPTER 13 BANKRUPTCY HELP YOU GET OUT OF DEBTS?
The answer is in fact, yes. A chapter 13 bankruptcy can help you get out of debts faster and even more secure than any other plans there is. You do not necessarily lose your belongings, have your house foreclosed upon, or even lose your car, because, in a manner, you are protected by legal order. Albeit, this is subject to the fellow not breaching the contract of his repayment plan or plans. As an added incentive, after completing the repayment plan, you may be discharged from other underlying debts.
HOW DOES A CHAPTER 13 BANKRUPTCY HELP YOU GET OUT OF DEBTS?
Chapter 13 can help you get out of debt in two major ways. These are:
- Repayment plans through a trustee.
- Debt Discharge.
REPAYMENT PLANS THROUGH A TRUSTEE.
This has been covered above but for clarity’s sake, this is the process of monthly payment to a chapter 13 trustee who is in charge of distributing the payments to all creditors for a period of three to five years.
A debt discharge is a document handed out at the end of the chapter 13 bankruptcy repayment plan that absolves the debtor of all obligations to repay certain debts.
The debts often discharged include non-priority debts like medical debts, credit card debts, personal loans, incurred debts through a property compromise.
Debts that cannot be wiped however include priority debts like management claims, mortgage payments, car debts, etc.
ELIGIBILITY FOR A CHAPTER 13
This program is usually available to individuals or sole proprietorships only. It is open to regular income earners who can afford to pay off their loans after deducting their cost of living at the end of the day.
It is only available to people who have $394,725 or less as unsecured(medical and debit card) deficits and people who have less than $1,184,200 in secured deficits.
Notwithstanding how deep you might be in the woods financially, recovery is possible without necessarily planning off all your belongings. A chapter 13 bankruptcy is just one of the ways to.