There are different types of bankruptcy, and not all of them are for everyone. One type of bankruptcy is a Chapter 13, where you keep your property but are required to pay back all or a portion of your debts over a certain time period, usually 3 to 5 years.
In a Chapter 7 bankruptcy filing, most of your debts are cancelled, but you might have to sell some property in order to pay your creditors. A Chapter 13 bankruptcy,however, is considered a “reorganization” bankruptcy as you will end up paying back a portion of the debt you have.
When a Chapter 13 Bankruptcy Is the Right Choice for You
A Chapter 13 bankruptcy is right for someone who can meet the payment obligations set up under the bankruptcy plan. This is generally the right thing to do for individuals who have a higher income. Additionally, this is also the right type of bankruptcy filing for individuals who do not have a high amount of debt to pay off, need to catch up on missed mortgage payments, or pay back taxes.
To file for a Chapter 13 bankruptcy, your secured debts – ones in which a creditor has the right to take a specific item – cannot exceed $1,149,525. Unsecured debts – or ones that don’t give a creditor the right to take property or assets – cannot be more than $383, 175.
If you would like flexibility in paying back your debt, a Chapter 13 bankruptcy would be the right filing for you. Flexibility means that you are able to propose a payment plan to the bankruptcy court depending on your income and how much you owe. For example, if your average monthly income is more than the median income for your state, you will be required to propose a 5-year repayment plan. If it is less than the median, you will be required to propose a 3-year repayment plan.
The plan allows you to choose how and when you will repay your debts. It essentially allows you to maintain some control over how you will use your income during this period, and give you some peace of mind, even through this financially stressful time.
Contact a Bankruptcy Attorney
The Law Office of Erin Bradley McAleer has years of experience handling bankruptcy filings. We also understand that filing for bankruptcy is a stressful time and, for many, brings with it embarrassment. We strive to reassure our clients and help them find the best solutions to get their finances back on the right track.
For an initial no-obligation consultation, we welcome your call to our office at (360) 334-6277.