If you are seeking an effective way to reorganize your debts, it may be worth learning more about Chapter 13 bankruptcy. In a Chapter 13 case, you can repay creditors over a period of no more than five years while retaining property such as your Pennsylvania home. You may also receive an automatic stay of creditor collection activities while the matter is pending.
Who qualifies for Chapter 13 protection?
You may be eligible for a reorganization bankruptcy if your outstanding debt balances fall within federal guidelines. As of 2020, the unsecured debt limit is $419,275 while the secured debt limit is $1,257,850. These limits are scheduled to remain in place until at least 2022. Furthermore, you must show proof of steady income, that you are filing as an individual and that you have filed all required tax forms for the past four years. It is important to point out that sole proprietors may be able to file for Chapter 13 protection.
How long does a repayment plan last?
If your income is less than the state median, your payment plan will last for three years. If your income is greater than this threshold, you will make payments for an additional two years. In most cases, the automatic stay remains in effect for as long as you adhere to the plan’s terms.
You’ll need to remain current on secured debts
In addition to keeping up with your repayment plan, you’ll need to stay current on future payments to secured creditors. Otherwise, a lender may ask to lift the automatic stay against foreclosures and repossessions. If the stay is lifted, there is a chance that you’ll lose your home, car or other property before your Chapter 13 bankruptcy case is discharged.