Bankruptcy for Wage Earners
Given the opportunity, most people who declare bankruptcy would choose to do so under Chapter 7, due to the fact that it offers the chance to get rid of most or all of an individual’s debt within a period of months. Not everyone, however, can pass the Chapter 7 means test, but this does not mean that they cannot still file for bankruptcy. Provided that your unsecured debts are no more than $360,475 you’re your secured debts are less than $1,081,400, you are most likely eligible to file bankruptcy under Chapter 13. This type of bankruptcy is commonly referred to as wage earner’s bankruptcy, since it is open to those individuals who are making a decent income yet whose debts are so great that they will not realistically be able to pay them off within the foreseeable future.
Chapter 13 bankruptcy involves a restructuring of the individual’s existing debt. Instead of continuing to have to keep track of several different debts, each with its own minimum payment and due date, you will now be able to focus your attention on a single monthly payment, because all your debts will be lumped together. Additionally, you will no longer be paying the same amount that you have been, because a Chapter 13 repayment plan is formulated in such a way that the monthly payment amount is low enough that you can afford it while still being able to meet your daily living expenses and to pay for an acceptable standard of living. Not only will you be paying less per month than you currently are, but you will also not have to keep paying until the debts are paid off. A Chapter 13 repayment plan extends for a period of three or five years, after which point the remaining debts are discharged, leaving you free to start on your life after bankruptcy.
Advantages of Chapter 13 Bankruptcy
While it may not be as fast as Chapter 7, this type of bankruptcy has its own advantages. You will not have to pass the means test of your income, and you will not have to take any action to defend your personal assets against liquidation by the bankruptcy trustee. If you have fallen behind on your mortgage, you may be able to include the missed payments in your plan of repayment, which would give you up to five years to cure the mortgage and avoid foreclosure – something that is not possible with Chapter 7. Learn more about this option and take your first steps now by contacting an Ocala bankruptcy lawyer at The Law Offices of Justin McMurray, P.A. for a free consultation.