What is Chapter 13 Bankruptcy?

 Posted on December 29, 2017 in Bankruptcy

Having to file for bankruptcy can be devastating. And while it is a serious issue, there are several facts that many individuals do not know about bankruptcy as a whole. There are two notable types of bankruptcy: Chapter 7 and Chapter 13. To fully understand bankruptcy, it is very important to understand the differences.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, also referred to as a “wage earner’s plan,” gives individuals with regular income an opportunity to create a plan to pay off their debts.

How Long Does the Process for Chapter 13 Bankruptcy Last?

Debtors make a repayment plan for the individuals filing for this type of bankruptcy to pay off their debts within three to five years. The debtor’s monthly income exceeds the state median, and then the plan will generally last five years. However, if the debtor’s income is less than the state median, the plan will last three years, unless a longer period "for cause” is approved by the court.

Who is Eligible for Chapter 13 Bankruptcy?

If an individual’s unsecured debts do not exceed $394,725, and his or her secured debts do not exceed $1,184,200, then he or she is automatically eligible to file for Chapter 13 bankruptcy. For the individual to be ineligible for Chapter 13 bankruptcy, he or she will have filed for a previous bankruptcy petition that was dismissed for the failure to appear in court in the preceding 180 days. He or she may also have failed to comply with the court’s orders to lose eligibility for Chapter 13 bankruptcy.

What Are the Advantages of Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows the filing individual the opportunity to avoid foreclosure. However, to save his or her home, the individual must still pay the mortgage payments in full and on time. The individual can also reschedule secured debts and extend them during the period of time when he or she files for Chapter 13 bankruptcy. Moreover, he or she may also be protected from third parties with the liability of consumer debts.

Contact a DuPage County Bankruptcy Attorney

Having to file for bankruptcy can make for a very stressful financial experience, but it does not have to mean the end of the world. If you find yourself considering filing for bankruptcy, talk to a knowledgeable Wheaton bankruptcy lawyer. At Davi Law Group, LLC, we understand your questions and concerns about bankruptcy, and we are always glad to help. Call us today at 630-657-5052 for a free initial consultation.

Source:

http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics