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A Chapter 13 bankruptcy in Raleigh, NC, also known as the Wage Earner Plan, is an excellent option for debtors who want to pay off their debt without accumulating further interest from dischargeable debts. It allows individuals to get their finances in order through a repayment plan under the protection of a federal court.
Debtors who file for Chapter 13 bankruptcy have a chance to keep most or all their assets. This article covers the essentials of this chapter —from its criteria to its key benefits— and the ways debtors can increase their chances of qualifying for it.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is designed for debt-ridden individuals with regular income. Unlike Chapter 7, which completely wipes out most debts, Chapter 13 enables individuals to pay some or all their debts with a repayment plan that spans from three to five years.
The length of the repayment plan depends on the debtor’s income. For instance, the latest median income for North Carolina is $52,752. If the debtor’s income is less than this amount, then they may qualify for a three-year plan. Those who earn above the median, on the other hand, are typically eligible for a five-year repayment plan.
In no case will a payment plan be approved beyond five years. Most of the remaining debts may be discharged after this period.
Another benefit of filing for Chapter 13 bankruptcy in Raleigh, NC, is the automatic stay which prevents creditors from foreclosing the debtor’s home. Chapter 13 also protects the debtor from all collection efforts and harassment by the creditors.
What are the Chapter 13 Bankruptcy Qualifications?
To be eligible for Chapter 13 bankruptcy, the petitioner must have a regular income and meet the following qualifications:
• An unsecured debt that is not above $394,725
• A secured debt that is not above $1,184,200
• Up-to-date tax records
In addition, the debtor must not have any prior Chapter 7 or 13 bankruptcy petition that was dismissed for non-compliance to court orders and other similar reasons during the preceding 180 days. Likewise, the debtor should also have no record of filing for Chapter 13 two years prior or a Chapter 7 four years before the current petition.
Expert Advice on Qualifying for Chapter 13 Bankruptcy
Once a debtor has decided to file for Chapter 13 bankruptcy, it is highly advised that they work with a bankruptcy lawyer in Raleigh, NC to obtain expert assistance on navigating its complex processes. To ensure the chances of qualifying for Chapter 13, bankruptcy attorneys advise petitioners to:
- Be realistic with expenses and budget.
Factor in all necessary and reasonable costs into the payment plan. These include unexpected expenses such as health-related expenditures, urgent house maintenance, and insurance co-pays. The disposable income will be turned over to the Chapter 13 trustee for the creditors.
- Establish a minimum payment plan.
Determine the value of the non-exempt assets, then figure out the ideal minimum monthly payment by dividing that amount by the duration of the payment plan. This will help ascertain the feasibility of the repayment structure.
- Ensure that all taxes are filed accurately and on time.
A Chapter 13 bankruptcy requires the debtor to pay priority debts in full, and this includes recent tax obligations. If the debtor’s tax records are not up-to-date, it is imperative that they get their filing in order within a few weeks or by the creditor meeting. Inadequate and inaccurate tax filings are some of the most common reasons Chapter 13 applications are dismissed.
- Calculate priority debts into the payment plan.
Aside from expenses, the repayment plan should also factor in priority debts such as child support and alimony. If the debtor cannot afford the repayment plan after priority debts are added, they should consider other options. Consult bankruptcy lawyers in Raleigh, NC about filing for Chapter 7 instead.
Explore Your Options with Bankruptcy Attorneys in Raleigh
There is no need to struggle with debt forever —file for Chapter 13 bankruptcy in Raleigh, NC, to help regain control of your funds and emerge financially wiser from the process. Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our caring professionals.