How Does Chapter 13 Bankruptcy Work?
If you are struggling with debt, you might be considering the possibility of filing for bankruptcy. Yet you might not understand the differences between Chapter 7 and Chapter 13 bankruptcy, and you may be much more familiar with how Chapter 7 bankruptcy works. Indeed, many Americans think of Chapter 7 bankruptcy—a liquidation bankruptcy—when they imagine the bankruptcy process. However, Chapter 13 bankruptcy works much differently, and it has many benefits for debtors who are eligible. Our Oak Park bankruptcy lawyers are here to tell you more.
Eligibility as a Wage Earner
You might have heard that you will need to pass the “means test” in order to be eligible for consumer bankruptcy and that you cannot have assets or substantial earnings in order to file. It is critical to understand that these requirements only apply to Chapter 7 bankruptcy and not to Chapter 13 bankruptcy.
To qualify for Chapter 13 bankruptcy under the U.S. Bankruptcy Code, you will need to show that you have a steady income that will allow you to meet the terms of your repayment plan, and that you do not have too much debt to qualify. In 2021, the debt limits are $419,275 for unsecured debts and $1,257,850 for secured debts.
No Liquidation of Assets
Chapter 13 bankruptcy does not result in the liquidation of any of your assets. Instead, the Illinois bankruptcy exemptions will determine which debts will need to be repaid as part of your repayment plan.
Repayment Plan Allows You to Repay Debt Over Time
In a Chapter 13 bankruptcy case, the debtor will develop a repayment plan through which non-exempt debts will be repaid over the course of a three-to-five-year period. A regular monthly payment will go toward the repayment plan during the course of the debtor’s Chapter 13 bankruptcy case.
Automatic Stay and Repayment Plan Can Stop Foreclosure and Allow You to Remain in Your Home
One of the essential benefits of Chapter 13 bankruptcy is that it allows homeowners facing foreclosure to prevent a foreclosure and to get caught up on mortgage payments in order to stay in the home. The automatic stay will initially stop a foreclosure from moving forward, and then the debtor can catch up on mortgage payments and become current through the repayment plan.
Remaining Debt Can Still be Discharged
At the end of your Chapter 13 bankruptcy repayment plan, typically three to five years after your plan was approved, you can be eligible to have any remaining dischargeable debt discharged. Most unsecured debt is eligible for discharge, such as credit card debt or medical bills, along with other types of debt. If you have questions about what types of debts can and cannot be discharged through consumer bankruptcy, an Oak Park bankruptcy lawyer can help.
Contact Our Oak Park Consumer Bankruptcy Attorneys
Do you have questions about filing for Chapter 13 bankruptcy, or do you need assistance with your Chapter 13 bankruptcy case? Our experienced Oak Park bankruptcy attorneys are here to help. Contact the Emerson Law Firm to learn more.
Eligibility as a Wage Earner
You might have heard that you will need to pass the “means test” in order to be eligible for consumer bankruptcy and that you cannot have assets or substantial earnings in order to file. It is critical to understand that these requirements only apply to Chapter 7 bankruptcy and not to Chapter 13 bankruptcy.
To qualify for Chapter 13 bankruptcy under the U.S. Bankruptcy Code, you will need to show that you have a steady income that will allow you to meet the terms of your repayment plan, and that you do not have too much debt to qualify. In 2021, the debt limits are $419,275 for unsecured debts and $1,257,850 for secured debts.
No Liquidation of Assets
Chapter 13 bankruptcy does not result in the liquidation of any of your assets. Instead, the Illinois bankruptcy exemptions will determine which debts will need to be repaid as part of your repayment plan.
Repayment Plan Allows You to Repay Debt Over Time
In a Chapter 13 bankruptcy case, the debtor will develop a repayment plan through which non-exempt debts will be repaid over the course of a three-to-five-year period. A regular monthly payment will go toward the repayment plan during the course of the debtor’s Chapter 13 bankruptcy case.
Automatic Stay and Repayment Plan Can Stop Foreclosure and Allow You to Remain in Your Home
One of the essential benefits of Chapter 13 bankruptcy is that it allows homeowners facing foreclosure to prevent a foreclosure and to get caught up on mortgage payments in order to stay in the home. The automatic stay will initially stop a foreclosure from moving forward, and then the debtor can catch up on mortgage payments and become current through the repayment plan.
Remaining Debt Can Still be Discharged
At the end of your Chapter 13 bankruptcy repayment plan, typically three to five years after your plan was approved, you can be eligible to have any remaining dischargeable debt discharged. Most unsecured debt is eligible for discharge, such as credit card debt or medical bills, along with other types of debt. If you have questions about what types of debts can and cannot be discharged through consumer bankruptcy, an Oak Park bankruptcy lawyer can help.
Contact Our Oak Park Consumer Bankruptcy Attorneys
Do you have questions about filing for Chapter 13 bankruptcy, or do you need assistance with your Chapter 13 bankruptcy case? Our experienced Oak Park bankruptcy attorneys are here to help. Contact the Emerson Law Firm to learn more.
Comments
Post a Comment