Chapter 13 bankruptcy gives you the ability to save your home and your assets while also paying back all or part of the debt. This type of bankruptcy is the alternative for those individuals that may not qualify for Chapter 7 bankruptcy.
In order to determine which type of bankruptcy is best for you, your Minneapolis bankruptcy attorney will perform a means test. This is where all of your finances from your income to your debt is reviewed to see if you have any room in your income to pay any of your debts. If you do have some disposable income left, although it is not enough to meet all of your financial obligations, Chapter 13 bankruptcy will be the type you will file.
There are a number of reasons why you may need to file Chapter 13 bankruptcy instead of Chapter 7. They are:
- Keeping your home
- Preventing repossession of your vehicle
- The means test says you’re not eligible for Chapter 7
- Chapter 7 was filed sometime within the past 8 years
- Non-exempt asset protection
- Debts that cannot be discharged, such as student loans and taxes
When filing Chapter 13 bankruptcy, there are two classes that must be taken. The first is the class with an approved credit counselor that must be completed before the bankruptcy petition can be filed. The second is a financial management course after the repayment plan is approved. Both can be completed online, over the phone, or in person.
Chapter 13 is referred to as a way to reorganize debts. You are protected from the collections actions of creditors during this time. Foreclosure, lawsuits, liens, and any wage garnishments must stop as well. Mortgage payments and other debts are combined into a single payment, as long as the creditors have no objection. The money is distributed to the creditors from this payment. You will have 36 to 60 months to complete the payment plan and the payments distributed to creditors may only be a percentage of the debt. The payment amount is something that you can afford to make, which is why the term can vary.
Once the repayment plan is complete, the debts are discharged. This allows you to start all over. You can acquire new credit. Individuals who file bankruptcy do not have a lot of difficulty acquiring new credit after their debt has been discharged. Interest rates may be higher, but new credit cards, a mortgage, and car loans are possible.
If you are burdened by a mountain of debt, it is time to do something about it. It is time to stop feeling as if you fall down the mountain as soon as you start to ascend it. To stop the struggle, you need a good bankruptcy attorney to help you through the process. Paul Ross & Associates can help you go from dealing with harassing calls to creditors to being able to start over financially. Call for a free consultation at 952-448-3333.