What is Chapter 13 Insolvency?
Chapter 13 bankruptcy is an option available to individuals with substantial amounts of personal debt. Under Chapter 13, a person eliminates his or her debts by creating a plan to save money and repay the debts over a period of three to five years. This provides the debtor with a lengthy period of time to reevaluate finances and gradually move toward debt freedom. This form of bankruptcy is preferred by some individuals over Chapter 7, which requires a debtor to liquidate a substantial portion of his or her assets to repay debts. With Chapter 13, you will liquidate few or no assets and repay your debts with the income you earn over time.
Eligibility: Debt Limits
To qualify for Chapter 13, you must adhere to strict debt limits. Those with debts exceeding the amounts specified below are ineligible for Chapter 13 and must instead file for Chapter 7. The restrictions on debt are classified as secured debt and unsecured debt.
Must have unsecured obligations of $336,900 or less
Must have secured debts of less than $1,016,500
Debtor must be an individual. There are no eligible partnerships or corporations for Chapter 13.
Eligibility: Sufficient Income
Because debts under Chapter 13 bankruptcy are repaid with income saved, an individual must have sufficient income to petition for this form of bankruptcy. The debtor must have a steady source of income that will persist until all debts are repaid. Additionally, the income must be sufficient to cover necessary expenses while still leaving enough disposable income to repay outstanding debts. Without a reliable or sufficient income, it is unrealistic for a debtor to maintain his or her promise to repay all debts within three to five years. Those with a low or unreliable income may be required to declare bankruptcy under Chapter 7.
If you satisfy the above eligibility requirements, Chapter 13 bankruptcy may be an ideal option for you. Consider scheduling a consultation with a bankruptcy attorney to discuss your unique circumstances. A bankruptcy attorney will guide you through the filing procedure and assist you in developing a feasible repayment plan that you can complete within the next three to five years. In spite of the fact that you may have to make some financial sacrifices now, the short-term losses will be vastly outweighed by the long-term benefits of eventually escaping the grip of personal debt.
For Further Instructions
Please visit the website of the New Orleans bankruptcy attorneys at Kervin & Young, LLC today to learn more about filing for Chapter 13 bankruptcy and how you can take immediate measures to secure a more stable financial future.
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