How Debt Reorganization Can Help You
One option open to many people in debt is Chapter 13 bankruptcy, also known as debt reorganization. Debt reorganization is a tool that allows you to condense some of your payments down into one affordable payment so that you can afford to pay your mortgage and keep your home.
When many people think of bankruptcy, they are thinking of something different from debt reorganization. People tend to associate the word bankruptcy with Chapter 7 bankruptcy, an entirely different process that can require the person filing to give up their home, car or other possessions.
With Chapter 13 debt reorganization, you do not have to give up any of your property. In order to take advantage of this option, you must meet income requirements. You and your attorney calculate how much you can reasonably afford to pay your creditors each month after paying your mortgage and buying other essentials. If this number is high enough, your plan will likely be approved by a federal bankruptcy judge.
From the second you file with the court, you get something called an “automatic stay.” This means that your creditors will be forced to deal with the court when they want money. They can no longer come to you seeking to collect. They must stop all attempts at repossession and will no longer contact you.
If the court approves your plan, you will need to make this payment every month for three to five years. Upon completion of this payment plan, most or all of your unsecured debts will be discharged. While you will still need to pay your mortgage, your other debts, such as medical bills and credit card bills, will be gone.
For most people, a Chapter 13 filing doesn’t bring drastic changes to their way of life. When you file, nearly all of your disposable income will go to your monthly payment, but this is likely the same as your current situation. If you were already in debt and struggling to make payments, it is unlikely that you had any disposable income. Filing under Chapter 13 gives you the chance to stay in your home and keep your car or cars, all while making an honest effort to pay back your debts.
At DebtStoppers, our team of Chicago debt-reduction professionals works to help you get your financial life under control. Our attorneys help clients through the bankruptcy process from start to finish. To determine if Chapter 13 is the right solution for you, we offer a free debt analysis. To schedule your free consultation, call us now at 312-913-0630 or contact us online.