Hello World! Welcome Friends! Though the term “bankruptcy” is fraught with images of foreclosure and lost assets, it’s actually an effective legal method to protect yourself while experiencing financial hardship. Bankruptcy—also known as bankruptcy protection—stops things like creditor harassment, wage garnishment, IRS collection activities, lawsuits, and attempts to repossess your vehicle and property. It also literally keeps the lights on, as utility providers can’t legally shut off your electricity, heat, water, or telephone services under bankruptcy.
The most significant risk in filing bankruptcy is the potential loss of your home foreclosure. In addition to the significant mental and emotional hardship this would cause, losing your home can make it extremely challenging to work, amplifying your financial problems. If you find yourself in this situation, it may be best to file for bankruptcy under Chapter 13. This filing gives you time to pay missed mortgage and car payments so you can keep them while you work to pay off additional debt.
How Chapter 13 Protects You and Your Property
Chapter 13 of the Bankruptcy Code allows debt adjustments for those with a regular and stable income. Those who file under this chapter can often retain their property by paying their debts over three to five years. This kind of filing is also called a wage earner’s plan.
Even those with a regular income and a stable job can find themselves in financial trouble. Chapter 13 allows these individuals to create a payment plan based on their disposable income to pay off their debt in installments. Depending on the individual’s earnings, their plan will be for three or five years. No plan can last more than five years.
Though Chapter 13 plans are usually very strict, often demanding most or all of a person’s disposable income, they protect the person from losing their home. Retaining a safe, stable place to live helps individuals keep their jobs because they have a place to rest, bathe, prepare food, and wash their clothes.
Chapter 13 Eligibility Requirements
Before filing for Chapter 13 bankruptcy, you must confirm your eligibility. To file properly, you’ll need:
- Proof you filed taxes for four years before filing
- Secured and unsecured debts that do not exceed certain thresholds
- Enough disposable income to make payments on your plan
Suppose your employment doesn’t provide enough disposable income to cover your debt payments. In that case, you may supplement it with other sources of revenue, including a spouse’s income, pension, social security, disability or unemployment benefits, child support, rents, and monetary gifts.
Filing for Chapter 13
The first step to filing Chapter 13 bankruptcy is gathering all the information needed to fill in the paperwork, such as the amount of your debt and the value of your assets, including property, cars, and other personal assets items.
The next step is attending a credit counseling class and obtaining proof of completing it. Next, you’ll fill out the bankruptcy paperwork, including the Chapter 13 forms, and pay the filing fee. Your Chapter 13 repayment plan will be part of this paperwork. It’s a good idea to engage legal counsel at this point to help you craft your repayment plan and ensure that you fill out your paperwork correctly.
What If I Can’t Complete the Plan?
Though Chapter 13 repayment plans last five years at most, you can file for an extension if you cannot meet the plan requirements. This extension is called a hardship discharge because the individual filing it must prove they’ve experienced significant hardship that has made it difficult or impossible to meet the terms of their Chapter 13 plan.
You may be eligible for a hardship extension if:
- You experience a serious injury, illness, or other circumstances outside your control
- You’ve paid at least as much as you would have paid filing Chapter 7 bankruptcy
- It’s not possible to modify the Chapter 13 plan
These eligibility requirements are rigorous and closely followed by the courts, so it can be challenging to obtain an extension without overwhelming evidence. Retaining legal counsel to help you with this process will make it go more smoothly and increase your likelihood of success.
Veronica Davis is a writer, blogger, and legal assistant operating out of the greater Philadelphia area. She writes for Philadelphia civil appeal lawyer Mosser Legal.
Click the links below for any posts you have missed:
House Supplies Buying Guide: How to Shop Without Breaking a Bank
Follow This Advice to Create a Home Look That You Will Be Satisfied With
Air Conditioning Fixing Guide in Washington, Michigan
Find a Local Air Conditioning Repair Company In Kettering
Services You’re Probably Going to Need When You Own a Home
4 Ways to Sharp Up the Security In and Around Your Home
I’d love for you to join my email list! You’ll receive a notification straight to your inbox which will include links to my latest home project posts! Simply enter your address below.
Thanks for stopping by! Have a wonderful day/night depending on where you are in the world! Go with God and remember to be kind to one another!
Toodles,
Leave a Reply