A Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to repay their debts over a three to five-year period. This type of bankruptcy can be especially helpful for those who have unsecured debts, such as credit card debt, medical bills, and personal loans. When you talk to our bankruptcy attorney in Montgomery, or wherever you live, we can help form a payment plan that you can afford.
One of the main benefits of a Chapter 13 bankruptcy is that it allows individuals to keep their assets, such as their home, while they pay their debts back. Another benefit of a Chapter 13 bankruptcy is that it allows individuals to catch up on past-due payments on mortgages and car loans. This can help individuals avoid a foreclosure or repossession.
In addition, a Chapter 13 bankruptcy can also help individuals reduce or eliminate certain unsecured debts. Credit cards, medical bills, and personal loans may be discharged or reduced in a Chapter 13 payment plan.
To qualify for a Chapter 13 bankruptcy, individuals must have a regular income and their unsecured debts must be below a certain amount. In addition, individuals must take certain types of credit counseling and financial management courses before, and after, filing for bankruptcy.
When an individual files for a Chapter 13, their Birmingham bankruptcy attorney will work with the bankruptcy trustee to develop a repayment plan you can afford. This plan will outline how you will repay the debts over the proposed number of years. The repayment plan will take into account the individual’s income, expenses, and assets. The goal of the plan is to ensure that you are able to make the payments while still being able to afford their basic living expenses.
One of the most important things to consider when filing for a Chapter 13 bankruptcy is that it will have a significant impact on your credit score. A Chapter 13 bankruptcy will stay on your credit report for seven years, which can make it more difficult to obtain credit down the road.
However, you should also keep in mind that any negative impact on the credit score may be less severe than the damage caused by not paying your debts. Additionally, once an individual completes their Chapter 13 payment plan, their credit can start being rebuilt. It is important to note that a Chapter 13 bankruptcy is not the right option for everyone. Individuals should consider all of their options before deciding whether to file for any type of bankruptcy.
In conclusion, a Chapter 13 bankruptcy can be an effective way to manage certain unsecured debts and keep your home or vehicle if you are behind on the payments. It allows you to catch up on past-due payments on certain secured debts and avoid a foreclosure or repossession and reduce or eliminate unsecured debts. It is highly recommended to consult with a bankruptcy attorney in Prattville, or wherever you are living, before making any decision about what type of bankruptcy to file.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!