In Chapter 13
bankruptcy, you keep your property but in the process must pay back all or part
of your debts over a 3-5 year period.
This differs from
Chapter 7 Bankruptcy in the sense most of your debts are cancelled but you need
to surrender some of your properties to a trustee to pay your lenders.
But keep in mind the
following.
All are not eligible
for Chapter 13. This is what a Chapter
13 Bankruptcy Lawyer in Maryland will tell you. To be eligible you must be
able to use your income to repay some or part of your debt.
Yet, you may be keen
to choose between Chapter 13 & Chapter 7.
In such situations, bankruptcy lawyers in Largo can help
you. They will evaluate the financial condition you are in and decide which form
of bankruptcy is best suited to you.
Broadly, keep in mind
the following.
Chapter 7 is not for
you if:
- Your
present monthly salary is more than the median income for a household of
your size.
- Your
disposable income exceeds limits set by law.
The bankruptcy “means
test” will evaluate if your income is low enough for you to qualify for Chapter
7.
According to a Chapter 13 Bankruptcy Lawyer in Maryland,
“The means test is crafted to limit the use of Chapter 7 bankruptcy”.
However, it is
important to remember that median income levels differ from state to state, and
also vary by household size. To know where you stand, check up with the latest
table provided by Census Bureau Median Family Income by Family size.
If you do not pass
the Chapter 7 means test, it means the only recourse now is Chapter 13
bankruptcy.
There is a caveat
though.
“You have to follow a
strict budget monitored by the court”, warn bankruptcy lawyers Largo.
It is good to
remember that Chapter 13 has several advantages. For example:
- When
you have defaulted on your mortgage
- You
have tax obligations and other loans and debts that cannot be discharged
by Chapter 7
- You
are keen and capable to repay your debts
- You
have nonexempt property that you want to retain
You may still have
apprehensions whether Chapter 13 will work for you. Speak with your bankruptcy
lawyer to understand how Chapter 13 repayment plans work, and how it affects
your credit. You will also get ideas on more ways to handle your debt problems.
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