Chapter 13 can be used temporarily

On Behalf of | Sep 21, 2021 | Bankruptcy

Many Tennessee residents hit a rough patch financially occasionally. It’s not uncommon for personal finances to take a turn for the worse from time to time. When you can’t seem to get things back on track by adjusting spending or other typical options, you might determine a need to file for Chapter 13 bankruptcy.  

It’s a valuable financial tool 

Perhaps you owe one or more lenders a lot of money, but you can’t keep up with monthly payments. Chapter 13 bankruptcy enables you to make payments according to a court-approved reorganization plan. This can allow you the opportunity to adjust your payments to a lower amount or stretch them out for a longer period of time in order to give you time to catch up. Once you activate a Chapter 13 plan, it doesn’t necessarily mean you have to continue with it until the end.  

If your finances improve, you can restore your initial payment plan 

If your income increases or something else happens to put you in a better place financially, you might not need to keep the lowered payment plan. You can inform your lenders that your circumstances have improved and you are now able to restore the initial payment plan. Of course, if you need to see Chapter 13 all the way through, that’s fine, too.  

Eligibility requirements must be met before filing an application 

Several things have to happen before you can qualify for Chapter 13 bankruptcy. You have to prove that you have a reliable means of income that will be available to continue making payments. Also, the court must approve your proposed new payment plan, and your creditors will have a say in that process. If your income level isn’t high enough or is not reliable, there may be other types of bankruptcy that are better options for you. By requesting a meeting with Richard Banks & Associates, in Tennessee, you can schedule a review of your case in order to determine which might be the most viable debt relief plan. 

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