When a mounting pile of debt becomes too much to handle, filing for bankruptcy can be an effective solution. However, there is more than one type to choose from: Chapter 7 is designed to eliminate debt while a Chapter 13, also referred to as a wage earner plan, allows debtors to restructure their finances and repay creditors over time. To give you some insight into the latter option, the Robert Chamoun Law Firm in Southaven, MS, explains what it is and who it benefits.
How the Wage Earner Plan Works
Unlike in a Chapter 7 bankruptcy, those who file a Chapter 13 aren’t seeking complete forgiveness of their debts but rather a way to preserve their assets while paying creditors back through an affordable repayment plan. Along with their petition for bankruptcy, debtors must submit a plan of action suitable to their budget that details how they will repay their debts over the course of three to five years. Once the court approves the plan, creditors won’t be able to collect on any debt that hasn’t been included in the repayment schedule.
Though the wage earner plan was initially intended only for those who brought in a steady income, it is currently available to all individuals. However, interested parties must still meet the specified eligibility requirements. They are obligated to undergo a state-approved credit counseling program before filing, and they can’t have a previous bankruptcy dismissed within 180 days of their current petition. Their unsecured debts can’t total more than $360, 475, and their secured debts can’t exceed $1,081,400.
The wage earner plan appeals to many since it doesn’t require liquefying assets and typically won’t affect the debtor’s credit rating as long as a Chapter 7 would. If you are interested in exploring your debt relief options, don’t turn to the Robert Chamoun Law Firm. Backed by over 30 years of experience, they have the skill and expertise to help you determine the most suitable step to take to remedy your financial situation. Call (901) 596-4022 to schedule a consultation, or visit their website for additional information on how they can assist.