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When should I file Chapter 13?

On Behalf of | Jun 18, 2019 | Uncategorized |

If you are seeking relief from creditors by means of filing bankruptcy in Virginia Beach, you have two main options: Chapter 7 and Chapter 13. According to the United States Court System, Chapter 13 is also known as a “wage earners” plan and is aimed toward those who still have a regular income. Rather than a Chapter 7 bankruptcy, which is focused more on liquidating the debtor’s assets, a Chapter 13 is more focused on putting the debtor on a payment plan.

Chapter 13 is good for debtors who would like to avoid foreclosure. However, the debtor is still responsible for making regular payments to creditors over the course of the Chapter 13 plan. Generally speaking, debtors who have an income that is lower than the specified state median will be put on a Chapter 13 payment plan for 3 years, while those who have an income higher than this median will be on the payment plan for 5 years. Once you have finished with the payment plan, there is a chance that your remaining debts may be discharged.

Chapter 13 also involves consolidating debts. Rather than paying to individual creditors, you pay a trustee who then disperses the payments to your creditors. Additionally, Chapter 13 contains provisions that can help protect any co-signers who may be partially involved with your debts.

In sum, Chapter 13 may be a good choice for you if you are facing bankruptcy but have a steady income and are looking to avoid foreclosure on your home. While this post is intended to educate you on Chapter 13, none of these contents should be taken as legal advice.