Filing for a Chapter 13, also known as a wage earner’s plan, can help those who have tried all the other means in ditching their outstanding debt. By filing for Chapter 13, the debtors can not only avoid foreclosure or repossessions but can also pay back a part of  their debts over three to five years depending on their income.
 
Home at Risk
 

Most people file Chapter 13 bankruptcy to save their homes. If the foreclosure proceedings are completed before filing the bankruptcy proposal the debtor can still lose his home.

 
Chapter 13 could be particularly useful for debtors stuck in the following situations:
 

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  • Those wanting to protect their assets from liquidation.
  • Those wishing to pay off secured debts.
  • Debtors unable to pay their monthly mortgage payments.
  • If a property lien far outweighs the value of your collateral.
  • If you are unable to discharge your debts by filing Chapter 7 bankruptcy.
  • Income is more than the prescribed limit for a Chapter 7.
 
By the Numbers
 
Anyone with regular income can file for Chapter 13 if unsecured and secured debts are not more than $336,900 and $1,010,650 respectively. Before filing for bankruptcy, you will need to complete a credit counseling course which can be done over the phone or through the internet. It takes approximately 30 minites to complete.
 
If you have filed for Chapter 7 earlier, you have to wait for at least 4 years before filing for Chapter 13 again in order to discharge your debt. However, in order to stop a foreclosure or repossession, you can get bankruptcy protection immediately.
 
As a first step for filing for Chapter 13, your attorney has to work out a repayment plan that includes all debts, which will then be submitted to the court.
 
The Advantages of Filing for Chapter 13
 
  • Filing Chapter 13 will make you immune to any legal action initiated against you.
  • You can remove your debt while retaining your personal property and real estate.
  • The debt can be paid off through an easy repayment plan based on your income.
  • You can be relieved from the intimidating calls from collection agencies and creditors.
 
It is recommended that you complete documentation under the guidance of a bankruptcy lawyer because any errors while filing may result in the rejection of your bankruptcy plan. Also, if you fail to attend trustee’s meetings or don’t submit required documents the court can prevent you from filing for Chapter 13 bankruptcy.