For those who are experiencing a temporary gap in income, perhaps due to a job loss, a divorce, an injury or an illness, it can be difficult to continue to make ends meet. By the time income is restored, late fees, higher interest rates and overdue payments may have snowballed to make it impossible to catch up.
There are many reasons why you may choose to file a Chapter 13 instead of a Chapter 7 bankruptcy.
- You may not qualify for Chapter 7 under the means test;
- Filing Chapter 13 bankruptcy may allow you to protect assets that you would otherwise lose by filing Chapter 7 bankruptcy;
- Chapter 13 bankruptcy gives you more time to catch up on mortgage payments to prevent a home foreclosure;
- There are lower interest rate advantages which can be taken in a Chapter 13 bankruptcy.
Under a Chapter 13 bankruptcy payment plan, you will agree to pay 100% of your secured debt (past due amount on a house, car, etc.) over a three to five year period, while the remaining unsecured debt may only get one penny for every dollar that you owe them (a 1% plan). What your unsecured creditors receive is determined by how much you can afford to pay. A Chapter 13 bankruptcy plan is a form of debt consolidation – – you will make one payment to the bankruptcy trustee, who will then pay your creditors. At the end of the payment plan, any remaining unsecured debts will be eliminated and you will be up to date on your secured obligations.
What if your Circumstances Change During the Repayment Period?
In certain situations, we can help you modify your payment plan. If your income changes, it may be possible to modify the payments to a more affordable amount. If your income falls below a certain level, it may be possible to convert to a Chapter 7.
What if I need to make a LARGE Purchase During the Repayment Period?
I often get concerned questions that all start with “What If.” What if my car dies? What if I need a new roof? The possibilities of the What Ifs are endless. Your repayment plan can be modified according to the situation. If something comes up while you are in your plan, please reach out to us as soon as possible so that we can go through the proper steps to make your plan successful.
To learn more about your options for debt relief through bankruptcy, please contact Daniels Associates today at 502.583.8300 or online.