Chapter 13 Bankruptcy 101: Basics for Beginners [Infographic]
In case you missed it, our blog posts this month have focused on the process of filing for bankruptcy. To get caught up, check out our posts on what bankruptcy is and whether Chapter 7 is the right move for you. Today, we’ll be discussing the second most popular form of bankruptcy, Chapter 13.
Chapter 13 bankruptcy is appropriate for those who wish to hold on to the majority of their property and assets while still working towards paying off their debts. It allows debtors to create a contract to pay off their debt holders in a 3-5 year span of time.
One of the biggest advantages to filing for Chapter 13 is that it puts distance between you and the debt collectors. Instead of paying them directly, the money is diverted to the person who holds your repayment contract and they distribute the money to individual debt holders. So long as you continue making payments on time, you will find that collection calls stop.
Everyone is eligible for Chapter 13 with two stipulations:
- Your unsecured debt must total less than $394,725 and your secured debt must total less than $1,184,200
- You cannot have been unenrolled from a previous bankruptcy due to failure to comply with the terms of your agreement or willful failure to appear at court.
The process of getting approved for Chapter 13 is similar to the process for filing for Chapter 7. One major difference, though, is that this form of bankruptcy is dismissed from your credit report in only 7 years, while Chapter 7 requires 10 years.
While it’s not the right fit for everybody, Landwehr Law Offices can help you determine if it’s the right fit for you. Give us a call or visit our contact page to hear back from one of our experienced attorneys about any questions you have regarding the bankruptcy process.