Financial challenges can arise without warning. Illinois residents can face unexpected life changes, medical issues, loss of a job and a multitude of other problems that can render them unable to escape financial struggles without help. Fortunately, there are alternatives available. One that many people do not fully understand is Chapter 13 bankruptcy. Before pursuing this option, it is essential to know what it is and who is eligible.
Chapter 13 is for people who are wage earners. If a person has a consistent income, a plan can be formulated to pay all or part of the debts over time. With Chapter 13, a repayment plan will be made so the creditors can be paid in three to five years. The monthly income will be important. If it is lower than the median of the state, the plan will span three years. If it is higher than the state median, it will be for five years. No plan will go beyond five years. No collection efforts by creditors can be started or continued during the Chapter 13 agreement.
Anyone who has unsecured debts lower than $394,725 with secured debts below $1,184,200 can use Chapter 13. The consumer price index dictates these amounts, so it must be watched when considering Chapter 13. A person who is self-employed or has an unincorporated business can also file for Chapter 13. A partnership or corporation cannot file for Chapter 13. If the person has filed for Chapter 13 or any other form of bankruptcy within the previous 180 days and it was dismissed for willful failure to appear or a failure to comply with court orders or was voluntarily dismissed after creditors tried to recover property with liens attached, then there cannot be another filing for Chapter 13. It is also required for the debtor to seek credit counseling from an accredited source within the previous 180 days.
Before filing for bankruptcy under Chapter 13, a debtor must know what the process entails and if he or she meets the criteria. For help with debt relief, speaking to a lawyer who is experienced in helping clients with their financial issues is a must.
Source: uscourts.gov, "Chapter 13 -- Bankruptcy Basics," accessed on April 20, 2017