If you are finding your quality of life compromised due to the difficulty you have meeting monthly debt payments, it may be time for you to consider seeking debt relief. While there are many forms of debt relief available to individuals, the most effective option for long-term, permanent debt relief is bankruptcy. Bankruptcy is a system that has long been put into place by the government to protect debtors from destitution, provide fair treatment to creditors, and promote a healthy economy overall. If you are considering bankruptcy, Behm Law Group Ltd. attorneys can help you file a strong case for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN.
Both Chapter 7 and Chapter 13 are the most frequently filed types individual consumers. While Chapter 7 provides liquidation of non-exempt assets in exchange for debt discharge, it’s not a chapter that most wage-earning debtors can qualify for because their incomes are often too high.
Chapter 13 bankruptcy, on the other hand, offers a way to restructure your debts into a manageable repayment plan lasting three to five years. Although Chapter 13 is a common bankruptcy format, there are still many frequently asked questions we receive including:
- How much of my debt will I have to repay?
- You will have to pay all of your secured debts (i.e., mortgages and auto loans) that you want to retain in full, but the payment arrangements may be under different and under more friendly terms.
- You will have to pay priority debt (i.e., child support and tax debt) in full.
- You will most likely have all or much of your unsecured debt (i.e., credit card debt and medical bills) discharged after your chapter 13 plan is concluded. The amount you will pay depends on how much your monthly income exceeds your monthly reasonable and necessary living expenses and how much you would be able to repay creditors with the value of your non-exempt, liquidated assets in hypothetical Chapter 7 bankruptcy case.
- How long will my plan last?
- Your plan will last three years if your income is below the state median income of a similar household size.
- Your plan will last five years if your income is above the state median income of a similar household size.
- Will I have any income for personal use?
- The remainder of your income after you meet payment requirements for your secured and priority debts will be split into two types, disposable and discretionary.
- Your disposable income will go to your household needs, including income tax, utilities, food, and gas.
- Your discretionary income is yours to spend as you see fit.
- What happens if my income changes?
- Fluctuations in income and expense obligations are taken into account throughout the duration of your repayment plan. Three to five years is a long time, and your trustee will understand if changes occur.
- If you do have a job change or other significant life event that might affect your plan, notify your attorney and the trustee right away so your monthly plan payment can be altered accordingly.
Filing for bankruptcy is a complex process without the assistance of a trained professional no matter what chapter you file. Contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for help getting started with Chapter 13 bankruptcy in Pipestone, MN, today.
