You can be creative with Chapter 13 bankruptcy

On Behalf of | Jun 30, 2022 | Bankruptcy

If you’re interested in bankruptcy but you’re still earning a wage, you may find out that you don’t qualify for Chapter 7 bankruptcy. You simply earn too much money to use this, even though you still feel that you have too much debt to pay off. It puts you in something of a tricky situation, and a lot of people find themselves there.

The good news is that you may not be out of options. You could still use Chapter 13 bankruptcy. People with a consistent wage often qualify for this, despite the fact that they wouldn’t qualify for Chapter 7.

There are some other benefits, as well. For one thing, you can get very creative and take a lot of steps to save a substantial amount of money by using Chapter 13. The overall process consolidates the debt into a repayment plan, but there are different things you can consider as you do this.

Lowering interest rates

For example, in some cases, you’re able to get a lower interest rate. Maybe you have an auto loan that you can’t pay off. Even if the bank lowers your interest rate, they may still stand to make far more money if you’re able to continue with those payments than if they had to foreclose on your car and try to sell it to someone else. This can save you money and the bank can earn more, so everyone wins.

Buying more time

Additionally, Chapter 13 allows you to get a bit more time to pay back what you owe. As noted above, you still have an income. This isn’t a situation where you’re never going to be able to pay. You simply can’t pay everything that you owe right now. The repayment plan may spread it out over 3 to 5 years. Suddenly, that debt becomes affordable again. And, as noted above, most lenders would rather that the person who owes them money finds a way to pay that money off than anything else. This is why they are willing to work with you in some situations.

Getting the process started

If you’re interested in bankruptcy, you can see why it’s important to carefully consider all of the options that you have. Once you’ve determined what you qualify for and what you’d like to do, then you can get the process underway.