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What are advantages of Chapter 13 bankruptcy and who's eligible?

When people in Tennessee experience financial problems, one option that they might not consider for a variety of reasons is filing for Chapter 13 bankruptcy. However, Chapter 13 might be a viable choice for those who would like to have a fresh financial start. Before moving forward with a filing, it's imperative to know the advantages of filing for Chapter 13 and who is eligible.

With Chapter 13, there isn't the liquidation that will occur by utilizing other forms of bankruptcy. In addition, the person who is filing will have a chance to keep the person's home and not face foreclosure. If there is a foreclosure in progress, it can be stopped and it might clear mortgage payments that were delinquent as time passes. With Chapter 13, it is necessary to keep up with mortgage payments. In addition, Chapter 13 will allow the rescheduling of secured debts except a mortgage that is also the person's primary residence. The secured debts can be extended according to the plan crafted under Chapter 13. Payments might be lowered using this method. A third party such as a co-signer might receive protection on consumer debts. It will be similar to a consolidation loan as the payments go to a trustee who will in turn pay creditors.

Eligibility for Chapter 13 must also be understood before pursuing it. Anyone -- even a self-employed person or a proprietor of an unincorporated business -- can file if the secured debts are less than $1,149,525 and the unsecured debts are less than $383,175. The amounts vary contingent on the consumer price index.

Partnerships and corporations can't file for Chapter 13. A person can't file for Chapter 13 if there was a dismissal of a bankruptcy petition within the previous 180 days or if there was a willful failure to appear in court, follow the orders of the court, or had the case voluntarily dismissed after the creditors tried to recover properties on which liens were held.

Financial troubles can happen to anyone and while there is often a perceived stigma surrounding filing for any form of bankruptcy, it's an invaluable tool for those who are eligible. The first step is knowing whether Chapter 13 or another form of bankruptcy is applicable and appropriate is discussing it with a qualified legal professional.

Source: USCourts.gov, "Chapter 13," accessed on Dec. 7, 2014

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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