Basic Things About Chapter 13 You Should Know Before Filing For One

Bankruptcy Law Book and a Wooden GavelThere are different reasons why people and businesses go bankrupt. Like businesses, individuals can go bankrupt and do so over a period. Whatever is the reason for your financial exhaustion, you should consider the option of filing for bankruptcy.

There are different ways one can file for bankruptcy. One of the most common is through Chapter 13 Bankruptcy; or what attorneys in Salt Lake City such as Utah Bankruptcy Pros refer to as the Wage Earner’s Plan.

What is Chapter 13 Bankruptcy?

Chapter 13 is known as the Wage Earner’s Plan because it allows individuals who have a stable income to pay their debts in no less than three years and not more than five years. This gives people who have a job more time to pay their debts, thus the term Wage Earner’s Plan.

However, not everyone who has a job can be eligible under Chapter 13. Aside from being under employment, an individual should have no more than $383,175 unsecured debt like credit card bills or personal loans.

Also, a total of no more than $1,149,525 secured debts including mortgages and they do not allow car loans. These figures change regularly.

What can you expect from filing bankruptcy under Chapter 13?

Filing for bankruptcy would affect your credit rating and image. But, there is a silver lining in filing for one. Aside from buying yourself more time to pay off your debts, you would also be able to still gain access to your property and live in your home.

However, it is important to take note that filing Chapter 13 would not relieve you of your student loan debts or child support responsibilities. This would also mean that you would not have access to your credit card within one to three years of filing for bankruptcy.

You might do so after a certain period but at a higher interest rate.

There are definitely pros and cons of filing for Chapter 13 bankruptcy. But in most cases, the pros outweigh the cons making it a popular decision for people who registered for one.