If a Tennessee homeowner loses a job or encounters other issues that result in a loss of income, a serious financial crisis might arise from which it’s difficult to recover. Inability to pay mortgage or keep up with payments on other debts, such as a credit card balance, might spark a need to file for bankruptcy.
Since there are several types of bankruptcy programs under federal law, a person considering filing would first need to figure out which program best fits his or her particular needs and qualifications. Whether or not there is a means of reliable income has an impact on eligibility. Chapter 13 bankruptcy, for instance, is known as a wage earner’s plan.
A means test helps narrow down your options
In order to determine whether a specific person qualifies for Chapter 7 or Chapter 13 bankruptcy, he or she must take a means test, which compares his or her income information with the median income level in the same state. To qualify for Chapter 13 bankruptcy, a person must prove that he or she has a reliable means of income in order to keep making payments toward a debt.
In such a case, lenders would agree to restructure their payment plans so that a person who has filed for bankruptcy may retain ownership of assets while continuing to make payments to satisfy his or her debt.
Chapter 13 bankruptcy halts foreclosure
One of several benefits of the wage earner’s bankruptcy plan is that an individual who qualifies for this program may be able to save his or her home from foreclosure. Another benefit is that a lender might agree to allow a lower monthly payment over a longer period of time, which may, in turn, help an individual restore financial stability.
An experienced Tennessee bankruptcy law attorney can review a particular case to help determine whether Chapter 13 is the most viable option in a specific set of circumstances.