When is Bankruptcy 13 a good option?

If your financial obligations are overwhelming, bankruptcy may be the answer. Some individuals decide not to file bankruptcy for fear of losing their valuable resources. If someone owns a lot of personal assets such as a new car, a home or a boat and are afraid of losing them or their income is too high to qualify for Chapter 7 Bankruptcy they may find that filing Bankruptcy 13 is a better option. When you file Chapter 13 Bankruptcy you may be allowed to keep your property, unlike Chapter 7 where the debtors are forced to liquidate their assets. Instead of just washing away debts, this chapter requires that the individual make an effort to pay something on them but under better conditions. A Minnesota bankruptcy attorney can file a Chapter 13 bankruptcy which allows the debtor five years to repay some or all of his or her debts. The attorney will work with creditors of secured and unsecured debt to lower or eliminate interest rates and make payments as minimal as possible. With Chapter 13, the debtor will start paying one monthly payment that everyone agrees upon to a trustee who will then distribute the money to various creditors. This usually takes place approximately 30 days after filing bankruptcy. This entire process is done by the court and creditors are no longer able to try to collect money from the debtor. Usually the individual will end up paying 25% of all due balances, greatly reducing the financial burden. Since the debtor is making an effort to pay, they are allowed to keep their personal property. In order to qualify for Chapter 13 bankruptcy the debtor must have a regular, reliable source of income. The debtor must prove they have enough income to satisfy the set amount of payment that was determined by the court. Income tax filings must be up to date, secured debts cannot be over $1,010,650, and unsecured debts must be lower than $337,000. If someone owns a business they would have to file Chapter 13 as an individual. Individuals with median incomes seem to have the most to lose from filing bankruptcy. For this reason contacting a Minnesota bankruptcy attorney to discuss chapter 13 may be the best option available.