Unlike Chapter 7 bankruptcy, which eliminates your debt, Chapter 13 allows you to restructure and reduce your debt. Generally, this is achieved via a tailored three- to five-year repayment plan.
Many people who file for Chapter 13 bankruptcy do so due to temporary income gaps. If you lose your job or become ill, bills can start to stack up. Late fees, increased interest rates, and overdue payments only add to the problem and make it hard to get ahead. Chapter 13 bankruptcy can give you reprieve from all the above and allow you to get your finances back on track.
Eligibility for Chapter 13 Bankruptcy
While, unlike Chapter 7, there is no income limit to file a Chapter 13 bankruptcy, there is a limit to how much debt you can have. You must also be able to show you will have sufficient disposable income to pay off your debt.
You can use any employment income, as well as any benefits you receive, pension payments, royalties, alimony, and the proceeds from selling businesses or property.
As of April 2019, you may be ineligible to file under Chapter 13 if your debt exceeds the following limits:
- Unsecured Debts – $419, 275
- Secured Debts – $1,257,850
You can file for any debt under these limits—there is no minimum.
Advantages of Chapter 13 Bankruptcy
The main advantage of filing for Chapter 13 bankruptcy is that you retain all your property, and your credit score will take less of a hit.
It also helps you reschedule secured debts, most notably mortgage payments. Often, foreclosure is the biggest problem that people with large debts face. Chapter 13 can stop these proceedings and help you catch up on any delinquent payments over time. Some fees may even be waived.
This benefit also extends to other secured debts by lowering individual payments and spreading them out over the payment plan. Chapter 13 plans work like a consolidation loan where you pay a single trustee through cashier’s check or money order, who distributes the payments among all your creditors.
What is a Chapter 13 Trustee?
A trustee’s main job is to gain approval for a Chapter 13 plan from all applicable parties. The standing Chapter 13 trustee for Tampa Bay is currently Jon M. Wage, alongside his staff, he oversees all Chapter 13 cases in Florida’s Middle District.
If you are filing for Chapter 13 bankruptcy, you will meet with Mr. Wage or his staff around a month after filing. At this meeting, they will ask you questions about your situation, provide you with payment instructions, and on some occasions, make revisions to your payment plan.
Work with a Top Tampa Bankruptcy Attorney
If you’re considering Chapter 13 bankruptcy to get out from under high-interest rates, late fees, and debt incurred from a temporary income gap, we’re here to help. At DJS Law Group, we are committed to helping our clients achieve financial security. Our team will walk you through the bankruptcy process and ensure that you obtain a fair repayment plan and retain your assets. Call today for a free consultation at 888-266-1078.