For a Chapter 13 bankruptcy in Memphis, you can create a payment plan to pay your creditor over a period of 3-5 years. The amount of time that it takes to pay it off depends on the amount of debt accrued and your income. In order to be eligible for this type of bankruptcy, you need to have regular income that is high enough to cover the debt and your other expenses. Your debt can't exceed $1,149,525 for secured debts and $383,175 for unsecured debts. If you're eligible and determine that this is the best option for you, here are a few things that you should know:
Another thing that Chapter 13 bankruptcy affords to debtors is the opportunity to repay secured debts over a period. Oftentimes, the payment plans reduce the amount of the monthly payment that the debtor was paying. While Chapter 7 is the most popular option in bankruptcy, many people choose Chapter 13 because they feel a moral obligation to repay their debts.
Chapter 13 bankruptcy is type of reorganization bankruptcy, which means you repay some or all of your debts over time. Often, you pay back only the payments on debts that are secured by property that you want to keep.
If a debtor wishes to keep certain non-exempt assets for whatever reason, Chapter 13 may be a better choice to file for. Chapter 13 is similar to Chapter 11 but is designed for individuals rather than businesses. Under Chapter 13, the debtor is allowed to retain ownership over their assets. Chapter 13 also allows for individuals to come up with a reorganization plan in order to pay off debt over a period of three to five years. Another aspect of Chapter 13 is that a certain amount of debt can be eliminated depending on an individual's level of income. An advantage that Chapter 13 bankruptcy has over filing for Chapter 7 is that housing foreclosures may be stopped, though it may be reinstated afterward. Another advantage to Chapter 13 over Chapter 7 is that it can allow for super discharges of debt that are not found in Chapter 7.
So, what if you absolutely need to have debt? For example, what if you have to buy a car because your old car was totaled? For this type of situation, you may be able to get court approval for additional consumer debt. And if you incurred debt in case of an emergency, then you should talk to your lawyer as soon as possible to find out if your bankruptcy can still be saved.
Chapter 13 will also allow you to "strip" a second mortgage, which will convert it to an unsecured debt (like a credit card). When your Chapter 13 is closed, you'll only owe your first mortgage. To be able to strip, your home must be worth less (based on a comparable market analysis) than what you owe on your first mortgage. Chapter 7 will not you strip a second (or third) mortgage.