Tuesday, 28 Mar 2023

Misconceptions about Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a practical option for many people who have accumulated too much debt and can’t repay it. Misconceptions about this type of bankruptcy can make it seem daunting. Over 35% of all people in excessive debt in Hammond apply for Chapter 13 bankruptcy without going through every detail. Doing so is risky since failing to meet Chapter 13 criteria can leave you in more significant debt despite the bankruptcy. This guide details some reasons why you should approach a chapter 13 bankruptcy law firm in Hammond, IN, before making critical legal decisions.

Chapter 13 bankruptcy is not a choice between good and bad.

Many people considering filing for bankruptcy look at Chapter 13 as the “bad” option and Chapter 7 as the “good” option. While it’s true that if you file for Chapter 13, you will repay some of your debts, it’s important to remember that there are other benefits to choosing this particular type of bankruptcy.

For one thing, since there is an automatic stay that prevents creditors from trying to collect money during your repayment period (usually three years), many people find that they have more time to breathe and pay off their debts without worrying about lawsuits or wage garnishment. There is also a sense of relief in knowing that you’ll be able to pay off some of what you owe while retaining ownership over property such as vehicles and homes; these assets will not be liquidated (sold) by creditors unless they’re needed to make payments on other outstanding debts or taxes owed by the borrower under the terms set forth by their plan.

Financial trouble to file for Chapter 13 bankruptcy.

Many people in Hammond who file for bankruptcy do so because they are struggling with debt and want a fresh start. However, you can also file for Chapter 13 bankruptcy even if your income is high enough that all of your debts could be paid off without filing for bankruptcy. For example, if you’re paying $7000 a month on car payments and credit cards and have no other expenses, filing for Chapter 13 may be more beneficial than just letting the creditors take over your assets because it allows you to keep your assets while still getting rid of some debt.

Another misconception is that only people who have very little money can get approved by their lenders when they propose to pay off some of their debts over time through Chapter 13. This isn’t true either; many people with good incomes can get approval from their lenders when they propose a repayment plan under chapter 13 law (an “offering statement”).

Bankruptcy isn’t a personal failure.

You might think that filing for bankruptcy means you’re a financial failure or can never be successful again, but that simply isn’t true. Over 75% of Chapter 13 applicants in Hammond bounce back to normal life. The truth is that bankruptcy is a legal tool available to those who need it, and you can use it to start over and rebuild your financial life in ways that are better suited to your needs.

It’s not true that you’ll never be able to buy anything again after you file for Chapter 13 bankruptcy.

You can still buy things with credit in Hammond after filing for Chapter 13 bankruptcy. In fact, if you’re approved for Chapter 13 bankruptcy and get a court-approved payment plan, you may be able to continue to use your credit cards and buy items that are not immediately necessary but could help you build wealth (such as investing in stocks or real estate).

To be eligible for Chapter 13 bankruptcy protection under the “means test,” you must have enough income to pay off all of your unsecured debts over three years (or five years if you live in an area where the median family income is more than 75 percent above average). Such requirements remain less known, and one should approach a chapter 13 bankruptcy law firm in Hammond, IN, to ensure they have all the details.

Financial relief for all kinds of debt

While it’s true that Chapter 13 bankruptcy is often used by people with medical debts, who can’t afford to pay them off in full, or by people with high credit card balances, this isn’t the only kind of borrower that qualifies for Chapter 13. Borrowers can also apply for Chapter 13 bankruptcy in the case of vehicle or education loans.