Chapter 13 bankruptcy is a debt repayment plan. In order to be eligible for this option, you must have a steady source of income. The plan consolidates your debts, and you are required to make payments over the course of three to five years to a Chapter 13 trustee. The amount due each month will be based upon your income and ability to pay.
Only individuals are able to file for Chapter 13 bankruptcy. Business owners, who run their business as a sole proprietor, may file Chapter 13 to include business assets, as well as debt. However, there are limits to the amount of secured and unsecured debts that can be included. Because these amounts occasionally change from year to year, it is important to work closely with a bankruptcy lawyer to better understand the process and ensure you qualify.
Yes. If you have equity in your home, it is possible to refinance to avoid foreclosure. However, refinancing may erase any equity you have built, as well as create a costly second mortgage payment. In addition, there are fees associated with the closing of a refinanced mortgage. Filing for Chapter 13 bankruptcy can protect your home equity as well as allow you to catch up on any missed payments.
Filing for Chapter 13 will not discharge most taxes. For taxes that cannot be discharged, Chapter 13 will allow you to make payments on the unpaid taxes. Any penalties and interest accrued will stop the day you file for bankruptcy, as long as your tax returns are filed by the due date and prior to your bankruptcy petition date.
Yes, if you receive approval from the Chapter 13 trustee first. Approval is usually granted in routine situations, such as the purchase of a car. Credit cards may also be approved for business purposes if an employer reimburses you for the charges, or the charges are paid in full every billing cycle. Consumer use of credit cards, on the other hand, is forbidden.
You should begin by scheduling an appointment with an attorney to ensure you understand your legal rights and begin filing properly. Mr. Troutman has practiced bankruptcy law for over three decades, and can review your financial circumstances to determine if this option is right for you.