If you are struggling with overwhelming debt, there are debt relief options available to you, from negotiations and consolidations to completed discharge. What if you earn a decent income? What if you want relief from burdensome debt but don't want to sell your home or give up property to get it?
In these cases, Chapter 13 Bankruptcy is often the best course of action. This is an approach with many benefits. This form of bankruptcy focuses on debt reorganization over a three to five-year period, so that you can afford to continue paying down debt. This allows you to keep your home and to halt collection efforts so you can have some space to breathe.
Qualifying for Chapter 13
As an individual or a married couple, rather than a business, you meet the first qualification for Chapter 13 bankruptcy. You must also either live in the United States, do business here or own U.S. property. Another important criteria you must meet involves prior bankruptcies. You must not have filed a Chapter 7 bankruptcy during the past four years, nor Chapter 7 within the prior two years.
Moreover, because this form of bankruptcy requires you to continue paying off your debt, it is essential that you have enough disposable income to fulfill this requirement. The type of qualifying income is quite extensive, from regular wages or self-employment income to commissions and other non-work income and monetary benefits. A knowledgeable bankruptcy attorney can help you determine whether your income qualifies. An additional condition is proof that your federal and state income tax filings are current.
Finally, is the matter of your debt. Chapter 13 places a limit on the amount. Currently, those numbers are as follows:
- Secured debts may not exceed $1,184,200.
- Unsecured debts must not be more than $394,725.
- These amounts are in effect until the next adjustment on April 1, 2019.
Your debt situation
For many, the current Chapter 13 debt limits probably don't feel sufficient. Total U.S. household debt has been steadily increasing. Credit card debt and auto loans are the biggest culprits. Mortgage debt is actually declining a bit now after a huge $120 billion jump in the first quarter of 2016. However, on a yearly basis, mortgage debts are still a very big factor.
Outstanding student loans are another large contributor. Though this category fell slightly in the second quarter of 2016, it is still the second largest culprit overall. Delinquent consumer debt from all sources now stands at $589 billion. With these staggering numbers in mind, it's no wonder that you may be considering the broader relief bankruptcy provides.
If your debt is so substantial that Chapter 13 is not a viable option, don't despair. A skilled attorney in Florida can explore additional options with you to develop a plan that helps you manage your debt and move forward to a debt-free life.