A Chapter 13 bankruptcy may enable you to take control of your finances by restructuring your debts. If you earn an income higher than Virginia’s monthly average earnings, the court can help you rearrange your budget and repay your creditors.
Individuals with unsecured debts currently under $394,725 and secured debts under $1,184,200 may file for Chapter 13. With a three-to-five-year payment plan, you may pay off some of your debts while keeping your home, as reported by Bankrate.com. After the payment period, the court may discharge your remaining consumer debts.
Which debts may a Chapter 13 bankruptcy petition discharge?
Unsecured debts qualifying for discharge may include your unpaid credit card bills, personal loans and medical expenses. Some of your unsecured creditors may receive a percentage of what you currently owe them as part of a court-ordered payment plan.
Secured debts such as your mortgage or auto loan require that you stay up-to-date and continue making your payments. If you face foreclosure, filing a Chapter 13 petition may prevent you from losing your home; the bankruptcy court, however, may require you to catch up on your installments before entering into a payment plan with your creditors.
How much do I need to pay each month?
A court-appointed trustee examines your petition, tax returns, monthly income and expenses. By reviewing a list of your creditors, leases or other agreements, the trustee determines a reasonable payment arrangement. If you earn less than Virginia’s median income, your payment plan may last three years. If your income is greater than the state’s average, your plan may last five years.
Chapter 13 bankruptcy may work for you when you earn a regular paycheck. A trustee determines a payment arrangement based on your financial circumstances. When your payments are complete, the court may discharge the remainder of your unsecured debts.