Making the decision to file bankruptcy is not easy under any circumstances and can get confusing very quickly. Filing Chapter 13 bankruptcy is a big financial and life changing decision and you need to be well informed before you take any steps in that direction. There are several things you need to know before filing including the basic facts, the advantages, and the eligibility requirements. This article will cover these points so you have the information that you need.
There are several basic facts about Chapter 13 bankruptcy that you need to know. Known as the “wage earner's plan" this plan allows you to keep property and pay debts over time if you have a steady source of income. The general rule is if your income is less than the state median income, you can pay your debts off in three years or five years if your income is greater than the state median. In no case will the time period be extended beyond five years. If you have property that you want to keep, this may be the plan for you; but first, let's look at some of the advantages.
Although you are not in a good situation if you are considering filing Chapter 13 Bankruptcy, there are several advantages including saving your home from foreclosure, rescheduling secured debts over the life of the plan, and consolidating your payments. Saving your home is obviously a great advantage, but by rescheduling your secured debts, you are able to lower your payments which makes them more manageable. The third advantage is the consolidation of debts. You make payments to the trustee in charge of your case and they make payments to your creditors thus ending any contact you have with them which is always a good thing. To take advantage of these advantages, you must meet certain eligibility requirements.
To file there are several eligibility requirements that must be met. The first requirement is your unsecured debts can't exceed $336,900, and your unsecured debts can't exceed $1,020,650.00. The second requirement is that you cannot have had a bankruptcy petition dismissed in the preceding 180 days for willful failure to appear in court. Having received credit counseling by an approved credit counseling agency in the prior 180 days is the third requirement that must have been met. Also, if a debt management plan was made by the counseling agency, it must be filed with the court.
In this article, we covered the basics of filing Chapter 13 Bankruptcy, knowing the advantages, and knowing the eligibility requirements. These things can help you be well-informed as you make this all-important decision. Keep these points in mind to maintain a clear state of mind during this difficult time.
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