When a financial crisis arises, it can negatively affect all aspects of your life. Not only might you not have spending money, you might also have trouble making ends meet at home, such as making mortgage payments on time or keeping enough food on the table to feed your family. Financial tools, such as Chapter 13 bankruptcy, may be available to help you alleviate debt and get your finances back on track.
In a minor financial crisis, you may be able to restore stability by adjusting your budget or generating supplemental income with a part-time job. Programs such as Chapter 13 bankruptcy, however, are designed to provide support to those who are unable to resolve financial problems through basic means. Not everyone is eligible this type of bankruptcy, so it’s important to determine if you qualify before filing an application.
How much unsecured debt do you have?
One of the first issues to assess when determining if you’re eligible to file a Chapter 13 bankruptcy petition, is how much unsecured debt you currently owe. An unsecured debt is a loan or debt that is not protected by a guarantor or by collateral. The most common types of unsecured debt include medical bills, credit card debt and personal loans.
To qualify for Chapter 13 bankruptcy, the total amount of your unsecured debts must be lower than $394,725. Your secured debts, on the other hand, must not exceed $1,184,200. If you don’t meet these requirements, it doesn’t necessarily mean you don’t qualify for bankruptcy, only that you are ineligible for the Chapter 13 program.
Additional eligibility requirements for Chapter 13 bankruptcy
To qualify for Chapter 13 bankruptcy, you must receive credit counseling from a court-approved agency within 180 days preceding the filing of your petition. If, however, you have already filed for bankruptcy in the past 180 days, and the case was dismissed, either because you didn’t show up in court or the creditors in question sought relief by repossession, then you would not qualify for Chapter 13 at this time.
Benefits of this specific bankruptcy program
If you are worried about losing your home to foreclosure, Chapter 13 bankruptcy is an option you might want to explore. One of the benefits of filing under this particular program is that your petition activates an automatic stay against most collection actions.
As long as the stay is in effect, your wages may not be garnished, you cannot be sued by creditors, nor can they call you on the phone, demanding payment. Filing for bankruptcy doesn’t mean you want to negate your financial responsibilities. It’s a helpful financial tool that may enable you to restructure your debt agreements so that you can bring payments up-to-date and lay the groundwork for a stronger financial future.