A Chapter 13 Bankruptcy is also called a "wage earner's plan". It allows a debtor to develop a plan that pays back a portion of their debt. The plans are typically five years long but may only be three years if the debtor makes less than the medium wage. A bankruptcy attorney can easily determine if you make less than the medium wage.
A Chapter 13 Bankruptcy can also allow you to include past due payments for a home mortgage or a car loan in the plan. This will stop a foreclosure or repossession and allow you to catch up with your past due payments in 36 or 60 payments over the life of the plan. You may only pay a fraction of your unsecured debt in the plan. The remaining unsecured debts may be discharged upon completion of the plan. Talk to a bankruptcy attorney in your area to determine which of your debts are dischargeable under a Chapter 13 Bankruptcy.
These are just a handful of reasons filing Chapter 13 bankruptcy might be your best option.
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Can I File Bankruptcy? Any individual, even if self-employed, may be eligible to file a Chapter 13 Bankruptcy.
You must have less than $360,475 in unsecured debt and less than $1,081,400 in secured debt. There are also limits based on prior bankruptcies and a pre-filing credit counseling requirement. Talk to an attorney to get the details about Chapter 13 Bankruptcy eligibility.
After the chapter 13 plan is approved the debtor must make payments to the trustee. The debtor will keep their property as long as they continue to meet the obligations of the repayment plan. The debtor must not acquire new debt without the authorization of the trustee. The debtor must not take any actions which jeopardize their ability to complete the plan. Payments to the plan must be made through payroll deductions, money orders or cashier's checks. Priority debts are given special status within the repayment plan and must be paid in full including spousal and child support, tax debts, wages, salaries and contributions to employment benefit plans. Failure to make the appropriate payments may result in a dismissal of the Chapter 13 bankruptcy case. Bankruptcy plans can be modified under certain conditions such as job loss or ill health. Qualifying debts are discharged at the completion of the bankruptcy plan. Creditors who had notice of the bankruptcy may not continue to collect discharged debts. Creditors for non-discharged debts (ex. criminal restitution or student loans) may continue to collect debt.
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