Reorganizing your Debt with a Chapter 13 Bankruptcy Compared to a Chapter 7-“Fresh Start”
Mounting credit card debt and high interest rates are making it impossible to reduce our debt even when we consistently make our monthly payments. Many debtors feel like there is no relief available because they either don’t qualify for a “fresh start” or they don’t want to lose valuable assets filing a Chapter 7. However, relief is possible. By filing Chapter 13-Bankruptcy, individuals with steady income may keep all their property and get immediate relief from creditor’s collection efforts and wage garnishments. The 2005 Bankruptcy Act sets forth the review criteria for bankruptcy. The Court looks at your average income from the prior six months and compares it to the median average income of people who live in your state. If your income is above the median average income, then the Court looks at how much you can afford to pay each month over a period of no more than five years. If you can afford to pay more than twenty-five percent of your unsecured debt than a Chapter 7 is...