It’s been nearly a month since we compared Chapter 7 and Chapter 13 bankruptcy on this blog. As we said then, both are forms of personal bankruptcy, but they approach the issue in different ways, and most of the time one is a better fit than the other.
Today, we will go into deeper into Chapter 13 bankruptcy, which is a way of reorganizing your debts to help you get a handle on them.
Chapter 13 has several advantages for those who qualify. For one thing, you get to keep all your property, including your car and your house. For another, you can discharge unsecured portions of your secured debt. For example, if the amount you owe on your car loan is greater than the fair market value of the car, the court will wipe out the difference.
Finally, the restricted debt that you must pay is often just a fraction of the original total debt, and interest-free. This makes the payments manageable and lets you dig yourself out of debt.
As you might suspect, it is relatively difficult to qualify for Chapter 13. The first thing the court looks for is if the applicant has a regular income that is high enough to pay his or her current expenses, with something left over to pay down his or her debts. This does not have to be a lot of money; perhaps as little as $167 per month.
For more details about Chapter 13 bankruptcy, and help with filing, please contact a bankruptcy attorney.