When Filing Bankruptcy Is the Best Option

About Me

When Filing Bankruptcy Is the Best Option

Thanks for stopping by my website. My name is John Finley, and I’m 46 years old. A few years ago, my wife and I found ourselves in a financial bind that continued to get worse. No matter how hard we tried to catch up, it seemed that our bills got larger, and we couldn’t keep up. Some of our credit card balances got so high that we couldn’t make the minimum payments. The collection phone calls came often and caused us a great deal of stress. We talked about different ways to get out of debt, but never found one that worked. We were both in agreement that filing bankruptcy was our last option. Well, the time came where we were out of other options and contacted a bankruptcy attorney. I am going to share our experiences with you and hope you find them to be helpful.

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Who Might Need Chapter 13 Bankruptcy?

Bankruptcy is a legal procedure enabling individuals or businesses to reorganize or discharge their debts. Although Chapter 7 bankruptcy, known for liquidating assets to settle debts, is widely recognized, another bankruptcy type is known as Chapter 13. This form of bankruptcy is also known as a "wage earner's plan" and allows individuals with regular income to create a repayment plan to pay off their debts over several years. In this blog, we will discuss who might benefit from filing for Chapter 13 bankruptcy.

Individuals with Steady Income

One of the main requirements for filing for Chapter 13 bankruptcy is having a steady source of income. This can be in wages, self-employment income, or rental income. The individual must have enough income to cover their living expenses and make monthly payments towards their debt repayment plan. In contrast to Chapter 7 bankruptcy, which involves potential asset liquidation, Chapter 13 enables individuals to retain their assets while gradually repaying debts.

Those Facing Foreclosure

Filing for Chapter 13 bankruptcy could help you save your home if you are facing foreclosure due to missed mortgage payments. When you file for bankruptcy, an automatic stay goes into effect, which halts all collection actions against you. This includes foreclosure proceedings. With Chapter 13 bankruptcy, you can include your past-due mortgage payments in your repayment plan and catch up on missed payments while keeping your home.

Individuals with Non-Exempt Assets

In Chapter 7 bankruptcy, assets like a second home or valuable jewelry may be liquidated to settle debts. On the contrary, Chapter 13 bankruptcy enables individuals to keep these assets by following the scheduled payments outlined in their repayment plan. This option proves advantageous for individuals with substantial assets seeking to safeguard them from Chapter 7 liquidation.

Individuals with Co-Signed Debts

If you've co-signed a loan, filing for Chapter 13 bankruptcy shields your co-signer from debt liability. An automatic stay is triggered upon filing, pausing all collection efforts against you and your co-signer. This provides a window to manage payments or reorganize debt under your repayment plan, safeguarding your co-signer's credit rating.

Filing for Chapter 13 bankruptcy is not a decision that should be taken lightly. It is essential to consult a bankruptcy attorney to determine if this is the best option for your financial situation. However, if you are struggling with overwhelming debt and have a steady source of income, Chapter 13 bankruptcy may provide relief and help you get back on track financially. It is never too late to seek help and take control of your financial future.

For more information, contact an office like Law Offices of John A Foscato SC to learn more. 


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