Chapter 13

You try to make payments on time and keep control of your finances, but something happened and you’ve gotten behind. Now you’re worried about bankruptcy and how it will impact your life. You still have an income and don’t want to sell your assets to discharge that debt.

Chapter 13 Bankruptcy can help

Chapter 13 Bankruptcy gives you the opportunity to pay some or all of your debts without liquidating (selling) your assets. If creditors are asking for immediate payment and you can’t keep up, this may be the option for you. With Chapter 13 bankruptcy, you may keep your home as long as you’re able to keep up on mortgage payments included in your settlement plan. In some cases, you may be able to discharge your unsecured debts—like credit cards or personal loans—entirely.

Eligibility requirements

  • You may have no more than $394.725 in unsecured debt (credit cards, personal loans)
  • Secured debt (mortgage, car loans) must not exceed $1,184,200
  • Individuals may file; businesses are not eligible
  • You must have regular income to pay down debt
  • Current tax filings are necessary and must be proven
  • Various attorneys fees, administrative fees, and filing fees to the bankruptcy court

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Chapter 13 vs. Chapter 7

Chapter 13 bankruptcy is a longer process than Chapter 7, which typically takes 6 months to process. In addition, it allows you to keep assets like your home, Chapter 7 bankruptcy requires you to liquidate (sell) many assets in order to pay your debts quickly.

Chapter 13 has the additional benefit of allowing your loan cosigners to avoid collections if bankruptcy settlements obligate you to repay the debt yourself. With Chapter 7 bankruptcy, cosigners on your debt are still obligated to pay.

Despite the protections involved, Chapter 13 bankruptcy does include some disadvantages. The legal fees involved with Chapter 13 may be higher than those with Chapter 7, and you may be obligated to repay debts for years. Chapter 7 bankruptcy settlements, by contrast, end most debt obligations.

Bankruptcy is a serious decision that will impact your credit and financial health for years. Chapter 13 bankruptcies remain on your credit report for seven years, making it difficult to apply for additional credit for a long time.

Before filing for bankruptcy, you may want to consider other available options, such as credit counseling or debt management or resettlement. If you feel as though you have no other choice, contact me to learn more about making the process as painless as possible.

Eastern Kentucky Bankruptcy Attorney

Looking for bankruptcy help in Kentucky but aren’t sure where to begin? I can help you press the “reset” button and restructure your debts so they can be paid quickly. Call Huff Law Office today for a free consultation and learn how Chapter 13 bankruptcy may put you back on the right path to financial freedom.