Even the most financially secure people sometimes face financial hardship. Whether facing sudden unemployment, an underwater mortgage, mounting credit card debt or other financial challenges, bankruptcy can offer a fresh financial start. Chapter 13 is one option available to individuals that offers debt relief.
Anyone who is in need of debt relief via bankruptcy may want to speak with an attorney. They may be able to guide you through the process and advise you on your options.
What is chapter 13?
Chapter 13 is a bankruptcy option that essentially reorganizes your debt. You do not have to hand over property to creditor to cover your debt. Rather, your payments are restructured in a way that you are given new terms, typically 3-5 years, to pay everything off.
Do I qualify?
Your income and debt amount determines your eligibility for chapter 13. If you make below the Pennsylvania median income, you may be better off filing for chapter 7 bankruptcy. Also, unsecured debts above $336,900 or secured debts above $1,010,650 are not eligible for chapter 13.
Do I need to do anything before filing?
Before you can file for chapter 13, you must receive debt counseling. Many agencies provide this for free or for very low cost. In addition to that cost, you must pay the $274 filing fee. This does not include attorney costs.
What if I can’t make my payments?
If you fall behind on your payments after filing, a few things may happen. Your debts may be rearranged after a job loss or change. If you face undue hardship, such as an extended hospital stay, the courts may forgive the debt altogether. Finally, you may have to convert the chapter 13 into a chapter 7 bankruptcy.