If the recent economic downturn hit you hard, you may face serious financial difficulties that put you in fear of losing your home to foreclosure. You consequently may wish to consider filing Chapter 13 bankruptcy. Why? Because as US Courts explains, Chapter 13 can not only stop foreclosure proceedings, but also provide you with other advantages as well.
Some of these advantages include the following:
- You get the opportunity to catch up on all your delinquent debt payments over a 3-year or 5-year period.
- You receive an automatic stay period during which your creditors cannot harass you for repayment of the debts you owe them.
- You get the opportunity to meet with your secured creditors and renegotiate your debts with them, often resulting in lower payments, lower interest rates or lower outstanding balances.
- You get the opportunity to construct a repayment plan for your debts.
- You get a de facto consolidation loan opportunity whereby you pay a fixed amount to the bankruptcy trustee each month and he or she, in turn, distributes this money to your creditors. In other words, you do not have to deal directly with your creditors during your Chapter 13 bankruptcy period.
Qualifying for Chapter 13
You must qualify for Chapter 13, also called wage earner bankruptcy, eligibility. You must have a regular income, whether earned as an employee or from self-employment. In addition, your secured debts must total no more than $1,257,850 and your unsecured debts must total no more than $419,275. Furthermore, you must not have filed any type of bankruptcy in the preceding six months that became dismissed, either voluntarily or by the court. Finally, you must receive credit counseling from an approved provider sometime within six months preceding your Chapter 13 filing.
