It is not only those who have little in the first place who can experience financial difficulties and struggle to pay off debt. At Macco & Stern, we have seen people in dire straits despite earning a substantial income on a regular basis. Your financial problems may have resulted from circumstances beyond your control, such as an economic downturn. Chapter 13 bankruptcy is for those who have the ability to earn enough to pay off their debts but need extra time to do so.
Chapter 13 reorganizes your debt so that you can arrange to pay it back over a period of three to five years, making smaller payments than you would otherwise. In effect, it buys you more time to pay off high-priority debts such as taxes, back child support and mortgage arrears. Without the extra time that you gain by filing for bankruptcy, falling behind on these payments could result in severe penalties, such as garnishment of your wages or foreclosure on your home.
In addition to buying you time, Chapter 13 also allows you to keep possessions that would be nonexempt, and therefore subject to liquidation, in a Chapter 7 bankruptcy, including jewelry, family heirlooms, investment property and vehicles valued over $4,000.
To qualify for Chapter 13 bankruptcy, you must meet certain income requirements, and your debt cannot exceed a maximum limit. Chapter 13 is not right for everyone, but if you earn a regular wage and just require extra time to pay off your debts, it may be the solution you have been seeking. More information about Chapter 13 bankruptcy is available on our website.