5 Facts About Chapter 13 Bankruptcy
If your debt keeps increasing, you may find it harder and harder to pay your bills. At some point, you might even fall behind on your bills, including your mortgage. If you are struggling like this financially, you might consider Chapter 13 bankruptcy. Here are five facts you should know as you start thinking about the options you have.
It Is Called the Wage Earner's Plan
Chapter 13 bankruptcy is not the only plan people use, but it is the only plan called the wage earner's plan. It has this title due to the nature of how the plan works and how you qualify for it. To qualify, you must have proof you earn a good wage. In fact, you must earn more than the average person earns in your state.
You Can Keep Your Home
Two, if you file, you can keep your home if you want to. Now, there are rare cases when this is not true, but in most situations, people who file for Chapter 13 get to keep their homes. If you are in the process of foreclosure, Chapter 13 will stop it from occurring. If you are past-due on your payments, Chapter 13 helps you catch up.
You Must Repay Most Debts
Due to the way Chapter 13 works, you will not find a lot of relief through a discharge of debt in this chapter. Instead, you will most likely have to repay the debts that you owe. There is a chance the court will discharge some, but this would not take place until you complete the plan in full.
Your Plan Lasts Up to 5 Years
You should also know that the plan is not immediate or instant in any way. It will take up to five years for you to complete it. Some people complete their plans in three years, but most people are on five-year repayment plans.
You Should Be In Great Shape at the End
The good news about all of this is that you should be in great financial shape when you complete the plan. You should no longer have lingering debts or be in a position where you face foreclosure. You should be all caught up, as this plan gives you a fresh start.
As you begin looking at debt-relief options, you could consider Chapter 13. If you are interested in more details about it, you can schedule a visit with a bankruptcy lawyer.