It's not unusual for people in Wayne County to face various financial issues that make it necessary for them to consider options to get a fresh financial start. One such option is Chapter 13 bankruptcy. Filing for Chapter 13 must be fully understood before moving forward with it. Chapter 13 is useful for people who have a job and earn a living. The process lets eligible people come up with a plan to pay what they owe. A repayment plan will be proposed and paid in installments so the debt is cleared in three to five years.
The amount the person filing earns will determine whether or not they will be approved for Chapter 13. If the person's income is lower than the applicable state median, then the plan must be for three years unless there is a court approval. A debtor who has an income per month that is higher than the applicable state median will usually have a plan for five years. No Chapter 13 bankruptcy can be for more than five years.
Chapter 13 has several advantages over other bankruptcy options. People are able to keep their homes from being foreclosed upon. The delinquent mortgage payments on a home that may have accrued during the financial turmoil can be cleared over time. Regardless, the payments must be made on time while the Chapter 13 is in progress. It is also advantageous because it will let those who are approved reschedule secured debts and pay them during the term of the Chapter 13. Payments can be reduced by doing this. It will also provide a layer of protection for those who might have co-signed for debts.
This form of bankruptcy is something of a consolidation loan. The debtor will make the payments to a trustee who subsequently distributes the payments to the entities to whom the money is owed. Creditors will not contact the debtor while the Chapter 13 is in progress. Chapter 13 is a useful strategy for those who meet the requirements and whose situation is such that it is a sound option. Before moving forward, however, it is always wise to seek advice and assistance from a legal professional experienced in Chapter 13 cases.
Source: uscourts.gov, "Chapter 13," accessed on Apr. 13, 2015