Anyone in Kentucky who has come to the end of his or her time limit to pay off debts may be considering filing for bankruptcy. While it may seem like it will worsen someone’s credit score, filing for bankruptcy may help restore someone’s credit over time by providing him or her with the breathing room needed to pay of his or her debts.
This article will take a look at chapter 13 bankruptcy, which the United States Courts sometimes refer to as a “wage earner’s plan.” Chapter 13 is a good option for people who have a steadysource of income, but who are simply unable to pay off all of their debts with their current earnings.
Eligibility for chapter 13
Unlike chapter 7 bankruptcy, which requires someone to fall below a certain income level, chapter 13 bankruptcy is open to any individual whose secured debts are below $1,184,200.00 and whose unsecured debts are below $394,725. Corporations may not file under chapter 13.
The way chapter 13 works
A chapter 13 bankruptcy is not unlike a debt consolidation loan. As debt.org points out, under this type of bankruptcy, a person’s assets are not liquidated. Instead, the debtor submits a plan for reorganization and works out a payment schedule that accommodates his or her current income.
One advantage to this type of bankruptcy is that it may allow debtors to keep their homes that had fallen into foreclosure. The time it takes for someone to pay off debts can take anywhere from three to five years.