Debt may have a crippling effect on a person’s life. Too frequently, debtors have a sense of utter helplessness as they struggle to make ends meet but are never able to outpace their creditors. People may experience extreme tension and worry as a result, feeling powerless and unable to truly manage their finances.
It is especially disconcerting to not know if you will be able to keep your house or automobile, which have grown to be necessary aspects of daily life. Without them, many debtors risk sinking further into a hole of monetary instability. Sadly, the constant effort of collecting debts may lead to stress that goes beyond simple financial worries. Many people experience emotional hardship in addition to their physical and mental health problems as a result of receiving unending phone calls, emails, and letters from creditors. All of these concerns and stresses may disappear with Chapter 13 bankruptcy. Our professionals can assist you in preparing for a new view on your life and walk you through the ins and outs of Chapter 13 bankruptcy.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy provides an avenue for those struggling with debt-related stress. It allows those facing overwhelming financial burdens a way out while also giving them a chance at rebuilding their credit scores. Through this process, people may be able to keep their homes and vehicles while reducing other types of unsecured debts, such as medical bills and credit cards. Additionally, it provides a way for debtors to pay off what they owe over time through a court-approved financial repayment plan, which is typically set up over the course of three to five years.
The Eligibility Requirements for Chapter 13 Bankruptcy
In order to be eligible for filing a Chapter 13 bankruptcy, individuals must meet certain criteria related to their income and debts. To be eligible for debt relief, individuals must have unsecured debts that fall below a certain threshold as well as secured debts that do not exceed a certain amount. Second, debtors must have a regular source of income with enough disposable income available after taking into account living expenses and other necessary payments. Finally, they cannot currently be involved in an existing repayment plan or under another bankruptcy protection.
The Benefits of Chapter 13 Bankruptcy
One of the major benefits of filing a Chapter 13 bankruptcy is that it allows individuals to keep their homes and other assets. Additionally, people may be able to restructure their debts, resulting in lower monthly payments and freeing up more cash for living expenses. Finally, the repayment plan is structured so that debtors can pay off their creditors over time while avoiding additional interest or penalties.
Although filing for bankruptcy may seem like a last resort, Chapter 13 can provide those struggling with debt-related issues with some much-needed relief and a fresh start. With the right guidance and support from an experienced bankruptcy attorney, individuals can develop an actionable repayment plan and get back on track.
What Goes Into Making a Repayment Plan?
When filing for Chapter 13 bankruptcy, you must also create a repayment plan. This plan determines how much of your debts you will have to repay and how much of them will be discharged.
Your repayment plan should include three main components:
- Your disposable income
- Payment duration (usually three to five years)
- A list of creditors and their payment amounts
The amount you are required to pay each month is based on your disposable income. Disposable income is the difference between your monthly gross income and any necessary expenses that are allowed by the court. These allowable expenses typically include rent/mortgage payments, utilities, and basic living costs. Your disposable income will help the court determine how much you are able to pay each month toward your debts.
The payment duration for a repayment plan is usually three to five years. This length of time allows you to make monthly payments that are manageable while still paying off your debt. If you fail to make timely payments during this period, the court may extend the duration or modify the terms of the repayment plan.
Finally, a list of creditors must be included in the repayment plan along with their respective payment amounts. When creating your repayment plan, make sure that all creditors receive equal payments unless they agree to different terms. Also, remember that secured debts (such as a mortgage or car loan) must be paid in full, while unsecured debts (such as credit card debt) may be partially discharged.
By including all of these components in a repayment plan, you can ensure that your debt will be handled efficiently and effectively. Making sure you create an accurate and viable repayment plan is one of the most important steps when filing for Chapter 13 bankruptcy. Hiring a Chapter 13 bankruptcy attorney can put you in a great position to succeed and move forward with your life!
Is Hiring a Bankruptcy Lawyer Right for Me?
Chapter 13 bankruptcy can be a great way for those facing financial distress to restructure their debts and start rebuilding their credit scores. It provides debtors with the opportunity to keep their homes and other assets while working towards financial freedom through an approved repayment plan set up over three to five years. With the right guidance from a qualified attorney, individuals may be able to take advantage of this form of debt relief in order to find long-term financial success. Contact Resolve Law Firm, APC, today at 213-583-5547 to discuss your Chapter 13 bankruptcy options.