The repayment term for Chapter 13 bankruptcy is three to five years. During that time, it is not uncommon for some people to experience changes in finances that interfere with their ability to stay current on their bankruptcy obligations.
Job loss, serious illness, death, and divorce are some of the many reasons why some people encounter difficulty making their bankruptcy payments. Fortunately, the law offers the following solutions for people who are unable to pay their Chapter 13 bankruptcy payments.
Chapter 13 bankruptcy allows eligible debtors to suspend payments for short-term financial emergencies. To qualify, trustee approval is necessary and the suspension term is three months or less.
Chapter 13 bankruptcy plan modification is an option for debtors who are experiencing a temporary setback in their ability to make on-time payments. The interruption must last longer than three months. Debtors must also maintain an income level that allows them to make ongoing Chapter 13 payments. Debtors who pursue dismissal do not retain the protection of the automatic stay and are subject to debt collection calls, wage garnishments and foreclosure or repossession.
Changes in income like job loss, hospitalization, etc., that cause long-term income loss or an inability to pay are generally not eligible for modification. There are also circumstantial limitations to bankruptcy plan modifications.
Depending on the cause of their current financial challenges and amount of income, debtors may not qualify for bankruptcy modification but qualify for Chapter 7 bankruptcy protection if their income passes the means test. Chapter 7 can help those experiencing long-term financial stress to start over when they are no longer able to meet Chapter 13 bankruptcy requirements.
Bankruptcy is a federal court procedure that allows people to get rid of debt and repay creditors. The intent of bankruptcy is to give people a fresh start.
Bankruptcy is not a magic pass that allows you to erase your entire past, but it can make your present easier and your future possible.
After filing for bankruptcy, bankruptcy court will protect you during the proceedings. The court will issue an automatic stay order that prevents many things from going forward. It will stop harassment from creditors and collections agents. It will temporarily stop foreclosures, repossessions or eviction. It will even stop wage garnishment.
Bankruptcy can wipe out unsecured credit card debt. It can also wipe out secured debts such as a mortgage, or a car payment, but you will have to give up the property. Bankruptcy can erase medical bills and unpaid utility bills. There are even some lawsuit judgments bankruptcy can wipe out.
While bankruptcy intends to give people a chance to start over, some debts will remain yours to pay. Student loans, income taxes owed, court ordered payments of child support or alimony, and court fines or penalties are exempt from the powers of bankruptcy.
There are two types of bankruptcy open to individuals. Which type of bankruptcy you file for is dependent on your debt, income and property. Chapter 7 bankruptcy involves the liquidation of your assets in order to repay debts. Chapter 13 bankruptcy involves working with the court to design a plan to repay your debts and creditors over a fixed number of years based on your income and the amount owed.
Next to your home, your vehicle is likely the possession you are most afraid of losing during bankruptcy. It may be your lifeline, and without it you could have difficulty getting to and from work, as well as any other places you need to go. If you are afraid your vehicle will be sold to satisfy your creditors, it is important to understand the facts before panicking. Depending on your case, you may be able to keep it.
Your ability to protect your vehicle during Chapter 7 bankruptcy will depend on how much equity you have in it. Equity is the difference between your vehicle’s current market value and the remaining balance on your auto loan. Many states’ bankruptcy codes have motor vehicle exemptions, which protect equity up to a certain amount. Neither Mississippi nor Tennessee are among these states. Yet, both offer wildcard exemptions of $10,000 that you can use toward any property of your choosing. If you have this amount of equity – or less – in your vehicle, you can use the wildcard exemption to protect it after filing Chapter 7 bankruptcy, so long as you are current on your auto loan payments.
Protecting your vehicle during Chapter 13 bankruptcy is often easier than protecting it during Chapter 7 bankruptcy. For one, your auto loan will likely be part of your Chapter 13 repayment plan. So long as you stay current on your payments, then, you will be able to keep your vehicle. Furthermore, you may even qualify for an auto loan cramdown. This may happen if you have owned your vehicle for longer than 910 days and if your auto loan’s balance is higher than your vehicle’s current market value. If you have, and if it is, you will pay off the current market value instead.
While some people lose their vehicle during bankruptcy proceedings, you may be among those who can keep theirs. A legal professional can help you understand your options for protecting it.
Too many people consider bankruptcy a painful last resort. They explore unsavory alternatives such as risky loans, borrowing money from friends or family members, and other options to avoid complete financial ruin. The truth is, the Bankruptcy Code was developed to give people a chance to eliminate debt and get a fresh start.
The reality is that if you are seriously considering bankruptcy as an option, you probably should have already filed. Here are some questions, though, that might make it easier for you to recognize you’re ready for the benefits a bankruptcy can provide.
While you might think these situations represent the life of a normal, hardworking American, they do not. You should not have to live in fear of phone calls from collection agencies. There is no shame in seeking debt relief from either Chapter 7 or Chapter 13 bankruptcy. Your financial issues only get worse when you continue to ignore the options provided for you. Financial peril can come as a result of numerous scenarios from medical emergencies to divorce to unexpected home repairs. Any of these situations can lead to disaster.
Every financial situation is unique, and it is wise to discuss your concerns and goals with an experienced bankruptcy attorney. It might be possible to stop your foreclosure, end creditor harassment and eliminate your unsecured debt. Do not hesitate to explore the sound financial options available to you.
Bankruptcy filings are on the rise in the United States. If you do not have much disposable income, have little savings or carry significant credit card debt, you may have wondered if you are at risk for bankruptcy.
Spending time gaining a detailed understanding of your budget and the types of events that could drive you toward bankruptcy may help you better understand your risk.
If you have not created a monthly budget yet, now is the time. Take the time to add up all your monthly expenses. Typical monthly expenses in your budget are items such as mortgage or rent, transportation, food, utilities, insurance and medical. Other categories beyond these include savings and personal spending, such as memberships, subscriptions, grooming and entertainment.
Beyond those, you need to account for any debt repayment, such as credit card payments. It is best to pay more than your minimum monthly payment to keep your credit card debt from multiplying out of control. Are you making enough money to meet your expenses and pay down your debt, or are you going further into debt each month? Do you have or are you putting money in savings to help you if your monthly income were to decrease abruptly?
Most bankruptcies are not a result of irresponsible spending but are instead a result of a low disposable income combined with some type of negative event, such as loss of employment or unexpected medical bills. Sometimes an unexpected medical event results in unexpected bills coupled with the loss of employment if the medical event renders you incapable of work for a period of time. Though you have little control over unexpected negative events such as medical emergencies, assess your risk with respect to what would happen if your income were to unexpectedly stop for a period of time.
If an unexpected life event occurs and you either do not have any emergency savings or exhaust what savings you do have, you may find you cannot pay your monthly expenses. Mortgage late fees are typically 3% to 6% of your monthly payment. Being late once enters you into the situation where you now must pay multiple months to become current.
Further, missing credit card minimum payments sometimes results in more than just late fees. Many credit cards have clauses in their terms and conditions that allow the credit card company to jump your interest rate, sometimes to very high amounts, if you make a late payment. If you were already struggling to meet your monthly expenses, your finances can quickly spiral beyond the point where you are able to reasonably get out of the red.
If you get into a situation where you cannot see a reasonable way out of debt, especially if you are in danger of foreclosure or are being harassed by bill collectors, bankruptcy may be a viable option and may help you protect some assets. Pursuing bankruptcy has pros and cons, but if you are in over your head, or expect to be over your head soon, exploring bankruptcy may be a good next step.
