Many people in Tennessee and beyond understand the daily living challenges that come with household debt. It does not take long for finances to get out of hand, sometimes with no foreseeable means of restoring financial stability, especially if the options available to help get things back on track are unclear. For instance, there is a specific type of bankruptcy that often enables people to retain ownership of their assets while paying back creditors.
Chapter 13 is a wage earner’s bankruptcy
When a person files for bankruptcy, he or she must first determine which program best fits the immediate debt relief needs and ultimate financial goals. Those who have a reliable means of income and wish to retain ownership of their home, vehicles and other major assets might want to learn more about Chapter 13 bankruptcy. It is often referred to as a wage earner’s debt relief program because a petitioner uses his or her ongoing income to continue to pay back lenders without having to liquidate assets.
Lower payments or extend the life of a loan
A mortgagor can often restructure a payment plan during a time of financial crisis when his or her current payment schedule is no longer feasible. By filing for Chapter 13 bankruptcy, a lender may agree to accept lower payments for an agreed-upon period or simply extend the overall life of the loan. This type of reorganization is often all a person facing financial crisis needs to resolve debt without losing a home to foreclosure.
What if eligibility requirements are not met?
It sometimes happens that a person is ineligible for Chapter 13 bankruptcy, especially if he or she cannot show proof of reliable income. If this is the case, there is no need to lose hope because there may be other bankruptcy options available. An experienced bankruptcy law attorney can review a specific case and recommend a debt relief strategy to fit a particular client’s needs.