For many people, their home is their largest investment. If you face financial hardship, it is extremely discouraging to think you might lose your home in the process. However, there is still hope.
Also known as reorganization bankruptcy, Chapter 13 bankruptcy can be especially beneficial for homeowners. Essentially, this is a repayment plan, and can help people with a steady income repay their debts over time.
Are you eligible?
Chapter 13 bankruptcy can help many people in financial distress. However, not everyone is eligible to file for this type of bankruptcy.
For the court to approve your repayment plan, you must provide qualifying bankruptcy paperwork to prove a few things, including:
- You are an individual, and not a business.
- You are employed, and have enough income to make the required monthly payment.
- The amount of your debt does not exceed the set limitations.
- You have up-to-date federal and state tax filings.
Why should you file?
Oftentimes, individuals are unqualified to file for Chapter 7 bankruptcy, which wipes out qualifying debt. Other times, people prefer to file for Chapter 13 bankruptcy because it offers a different solution.
There are a few common reasons why individuals take this route, such as:
- You can keep nonexempt property, such as expensive artwork, jewelry and other investments.
- You can keep your house and car if you follow the repayment plan.You are protected from wage garnishment while participating in the repayment plan.
- You have no direct contact with creditors while under chapter 13 protection.
Filing can also help you protect your home from foreclosure proceedings. This is especially important for families. Repayment plans involve making installments to creditors over the course of three-to-five years.
Filing for bankruptcy gets complex, and the stakes are high. It’s wise to seek legal guidance when choosing which type of bankruptcy is right for your situation.