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Why Chapter 13 might be the bankruptcy option for you

If you are swimming in debt and unable to afford your monthly demands, Chapter 13 might be a good option for you. With Chapter 13 bankruptcy, your debt is reorganized to an affordable payment that is paid to a trustee.

Chapter 13 is a way to bring debts current, ending collection calls and the worry and stress that goes along with them. In most cases, as long as you make the required payments and follow through with the plan requirements, at the end of the bankruptcy term, the court discharges the remainder of the debt. This gives you a fresh start on life.

What is the difference between Chapter 13 and Chapter 7 bankruptcy?

Chapter 13 takes longer than Chapter 7 and is more expensive because there is more involved. Chapter 7 usually takes only about four months to complete. Chapter 13 takes three to five years to complete. In Chapter 7, typically all unsecured debt is discharged.

If Chapter 7 is easier and quicker, why choose Chapter 13?

You must qualify for Chapter 7 by a means test, which is based on your income and expenses. Many people earn too much to qualify for Chapter 7.

Also, you will not qualify for Chapter 7 if you have had a recent bankruptcy filing, or if your home is in a foreclosure status and you want to keep it.

What are the qualifications for Chapter 13 bankruptcy relief?

You must have a regular income that will allow you to make payments on a payment plan. Your unsecured debt must be less than $383,175 and your secured debt must be less than $1,149,525.

Your bankruptcy attorney can calculate your figures for you and let you know if you qualify for Chapter 13. There are some prerequisites that must take place, such as taking a short credit counseling course, but it may be well worth it in the long run.

When you file a Chapter 13 bankruptcy, the rights of your creditors change. Collection calls and other collection actions are stopped in their tracks. Creditors must negotiate with the courts. Foreclosure processes are also halted and back payments negotiated if you plan to keep your home.

A bankruptcy attorney can help you understand if this sounds like the option for you. No one should have to live under the emotional turmoil that comes along with collection calls and harassment. Give yourself peace of mind and a fresh start.

Source: Wisconsin Bankruptcy Guide, "Chapter 13," accessed March 07, 2018

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