If you’ve always had regular income, you might have thought you’d
never need to file bankruptcy. Unless, of course, your debt has spiraled
out of control. While regular income is wonderful to have, if it’s
still not enough to pay all your debts, instead of getting ahead each
month you may be falling further and further behind. If this sounds like you, then
Chapter 13 might be a good option for you.
Don’t let fear or embarrassment hold you back from learning about
Many people have such fears about bankruptcy that they never consider it
as an option. This is especially true for people who took out debt they
thought they could afford at the time but have since seen their salaries,
business income, or assets fall as a result of the struggling economy.
Bankruptcy doesn’t mean you’re a bad person, and it doesn’t
mean you have to lose everything. Chapter 13 bankruptcy was designed as
a sort of debt-repayment option. If the court approves your plan, you
repay certain debt during a certain period of time (three to five years)
through affordable monthly payments. In most cases, this means you can
save your home and car, catch up on any late payments, protect certain
co-signers and spouses, and get the relief you need from other debt (such
as debt related to medical bills or credit cards) that you simply can’t afford.
What is involved in a Chapter 13 bankruptcy?
There are eligibility requirements for filing Chapter 13, namely that you
have sufficient regular income to afford the repayment plan. Also, certain
debt must be repaid in full in a Chapter 13 plan, including certain taxes,
child support, and a mortgage for a home you want to keep. Other debt,
such as for credit cards and medical bills, gets repaid only to the extent
you can afford it (either through having enough disposable income or nonexempt
assets). A second mortgage or a home equity line of credit (HELOC) might
even be eliminated or reduced in Chapter 13 through “lien stripping.”
If you’re struggling with your debt, please feel free to call my
office to discuss whether Chapter 13 would be an option for you. Call
Southbay Bankruptcy today at (619) 458-3739 to schedule a free consultation.