A Chapter 13 bankruptcy works differently than a Chapter 7. Instead of liquidating assets, a Chapter 13 bankruptcy sets you up with an affordable repayment plan that usually lasts three to five years.
When you propose your repayment plan, you might even be able to get some creditors to lower their interest rates or agree to waive some fees, allowing you to reduce the overall amount you owe.
How to Qualify for a Chapter 13 Bankruptcy
Essentially, you can probably qualify for a Chapter 13 bankruptcy if you do not qualify for a Chapter 7 bankruptcy, or if you don’t want to agree to all the conditions of a Chapter 7 bankruptcy. For example, if you plan to retire soon, but you are behind on your house payments and possibly facing foreclosure, or if your home’s value is too low for a Chapter 7 bankruptcy, you may want to explore Chapter 13. Others who could benefit from a Chapter 13 bankruptcy may also include those who:
- Earn too much money to qualify for Chapter 7;
- Have a budget that is too high for Chapter 7;
- Want to protect their home from being sold or save it from foreclosure; and/or
- Do not want to liquidate their assets.
An Overview of Chapter 13 Bankruptcy
When you file for Chapter 13, you include a repayment plan that the court needs to approve. This repayment plan needs to show that you will pay certain debts, such as priority debts, in full. If one of the secured debts you have fallen behind on is your home, and you are trying to keep it, you will likely need to create a repayment plan that includes your mortgage payment plus any arrears you owe from the last five years. The court will review your income to ensure you are actually able to make the proposed payments. You are also required to take a credit counseling class. Your case is over when you finish your repayment plan.
Who Does Not Qualify for a Chapter 13 Bankruptcy?
- People who file for a Chapter 13 bankruptcy need to have a regular income to prove they can make the payments on their repayment plan; otherwise, the court can reject their filing.
- People who have debts that are too high will not be approved for a Chapter 13 bankruptcy. Even if your income is regular, if the court determines that your debts are too high, your filing will be rejected.
Contact a Bankruptcy Attorney
If you want to hang onto your house or other personal property, but your bills are higher than you can currently afford, a Chapter 13 bankruptcy might be right for you. Filing for Chapter 13 bankruptcy can be a tricky process, so you should have a skilled bankruptcy attorney help you through the process.
The attorneys at Thomas M. Denaro, Esq. can offer clients can offer their wisdom and experience to ensure they never feel like they are alone in trying to solve their problems. We can offer reasonable payment plans, a flat fee on your case, and an initial consultation call that is free of charge. Call 718-863-6000 today.