| Filing Chapter 13 bankruptcy can benefit you if | | | | more than the State Median Income of your |
| you have failed in all your attempts to get rid of | | | | family size. |
| your outstanding debt. With the help of Chapter | | | | • You cannot file Chapter 13 within 2 years |
| 13, you can avoid foreclosure and also repay | | | | from the previous filing; you need to wait for 4 |
| some or all of your debts over a specific time | | | | years if you’ve filed Chapter 7 previously. |
| period; it usually takes 3 – 5 years to repay | | | | How does Chapter 13 bankruptcy function? |
| your multiple debts. Chapter 13 is also referred to | | | | As a debtor, you need to prepare a repayment |
| as reorganization bankruptcy or a wage | | | | plan and attach the proposal along with your |
| earner’s plan. | | | | bankruptcy documents while filing Chapter 13. |
| When do you need to file Chapter 13? | | | | Then, you should send the proposal to all your |
| Filing Chapter 13 would be helpful to you if | | | | creditors. Your repayment plan should comprise of |
| you’re experiencing one or more of the | | | | all your debts, that is, the priority claims along |
| following situations. | | | | with your secured and unsecured debts. |
| • You want to protect your assets from | | | | What are the pros and cons of filing Chapter 13? |
| liquidation. | | | | The pros and cons of filing Chapter 13 are as |
| • You want to pay off your secured debts. | | | | follows: |
| • You’re not able to pay your monthly | | | | Pros: |
| mortgage payments. | | | | • It stops any legal action against you. |
| • Your property lien is more than the value of | | | | • You may get rid of some of your debts. |
| your collateral. | | | | • You’re able to save your real estate and |
| • You’re not able to discharge your debts | | | | personal property. |
| by filing Chapter 7 bankruptcy. | | | | • You can pay back your debts through a |
| • Your income is much higher than what is | | | | structured repayment plan. |
| required for filing Chapter 7. | | | | • You’ll get no more calls from your |
| What are the eligibility criteria? | | | | creditors or collection agencies. |
| You need to satisfy some factors in order to | | | | Cons: |
| qualify for filing Chapter 13. The eligibility criteria | | | | • It will stay in your credit report for 7 years. |
| are as follows. | | | | • Your credit score may drop down by 200 |
| • You should have a regular income so that | | | | – 250 points. |
| you can make your monthly repayments. | | | | • You need to bear the costs of hiring an |
| • You should’ve enrolled yourself in a | | | | attorney and a trustee. |
| credit counseling session within past 6 months | | | | • You’ll have to pay the regular fees for |
| before filing bankruptcy. | | | | filing Chapter 13. |
| • According to the bankruptcy rules, you | | | | It is really important to do the required |
| shouldn’t have exceeded USD 307,657 and | | | | documentation under the guidance of an |
| USD 922,975 in your unsecured and secured | | | | experienced bankruptcy lawyer because the court |
| debts respectively. | | | | has every right to dismiss your case if there is |
| • You gross monthly income is required to be | | | | any mistake. |