Four Things To Know About A Chapter 13 Bankruptcy
If you are in debt and your finances are to the point where your monthly debt obligations have become overwhelming, you may be thinking about bankruptcy. You may be a person with a good income, but you simply have too much money being used to service debt. For people in your situation, there is the possibility of a Chapter 13 bankruptcy. This type of bankruptcy will reorganize and often reduce your debts into a single, monthly payment. There are, however, a few things you should know about this type of bankruptcy. The following are four of them.
You must have an income
You are expected to pay back a certain amount of your debt, so you will need an income. There are many sources of income that qualify. This includes income from self employment, retirement income, unemployment or disability checks. The list is long, so it is important to seek legal counsel. It can also be complex. Even if you are unemployed, your spouse's income can qualify you for a Chapter 13.
Certain debts must be paid
Any secured debt that you have must be paid back. This includes any liens that the IRS may have on certain property you own. But most unsecured debt will qualify. Two common examples are credit cards and medical bills.
There are debt limits in order to qualify
These numbers change periodically to adjust for inflation, but as of 2017 the secured debt limit was $1,184,200; the unsecured debt limit was $394,725. The next adjustment to these numbers will be in 2019.
You may still qualify for a Chapter 7 bankruptcy at a later time
You may have heard that if you file for bankruptcy, you cannot file again for several years. But this is true for a Chapter 7 filing. If you file for a Chapter 13 bankruptcy and it is approved, there is still the option of a Chapter 7 filing. This latter type of bankruptcy does not reorganize your debts, but simply wipes them away. Of course, just like a Chapter 13 your secured debts must be paid, so you may have to liquidate these assets. And there are other debts that are not covered under a Chapter 7. Still, you should be aware that the option is there, if your finances take a turn for the worse after a Chapter 13 filing.
A chapter 13 bankruptcy can be complex, so you need to speak to an attorney about your specific financial situation. If you decide to pursue a bankruptcy, do not stop paying your debts. Speak to an attorney, such as Jeffrey S. Arnold, Attorney at Law, P.C., first. If you quality for a bankruptcy, your attorney will inform your creditors and handle all phone calls and other correspondence with them.