Today, the economy seems to have recovered from the past recession. In your personal situation, you may be back to your normal income and employment may have already stabilized, but if you still have left-over debt that needs to be resolved as a result of an income interruption, bankruptcy can still be an option for you to use even if you are employed and back to your normal income. If you have old debt that you are making payments on, but do not see much hope of getting the debt paid off, and you make a comfortable amount of income and even have some expendable income on a monthly basis, bankruptcy is still not out of reach. Now may be the best time to cure past due debt while you are able to afford it. Even if you are behind on your mortgage and you are in a default status without any hope of re-instating the loan, a bankruptcy can get the loan re-instated and utilize your current income to pay back the past due debt if you cannot come up with the lump sum of money to re-instate the loan. Let’s take a look at how this works.
If you have expendable income each month, but too much debt to deal with and are facing a serious collection activity such as a foreclosure or wage garnishment, a Chapter 13 bankruptcy could be the solution for you. In a Chapter 7 bankruptcy, you must meet the Chapter 7 income thresholds according to the size of your household to qualify for the Chapter 7. If you have too much income to qualify for a Chapter 7, then Chapter 13 bankruptcy is the next option. It is true that you can still file a Chapter 13 bankruptcy even if you have expendable income. Actually, Chapter 13 bankruptcy is designed for a particular type of situation where the client had a temporary income interruption but is currently recovered from the income interruption and is now back to a normal income situation. In this scenario, the client or filer, may now have expendable income to pay back debt, but the debt may be past due and may have terms that do not allow the loan or debt to be re-instated without a lump sum payment that will return the loan back to current. If you are dealing with this type of situation, a Chapter 13 can force the past due debt into a 5 year payment plan if you can prove to the court that you can handle the current payment on the debt and also pay back the past due debt in a 60 month payment plan.
To illustrate further, if you missed your mortgage payment for 6 months and you have 6 months of past due debt to deal with and your mortgage bank has scheduled a sale date to foreclose on the property, a Chapter 13 plan can get your loan back to current by placing the past due debt into a 60 month payment plan if you are able to prove to the court that you have the income available to pay the past due payments and the current mortgage payments.
A Chapter 13 can be very complicated due to the paperwork support that needs to be provided to the bankruptcy court. You should consult your local bankruptcy law office to see how they can assist you with your Chapter 13 needs.
Bankruptcy Law Professionals is a Southern California bankruptcy law firm with bankruptcy attorneys in Riverside, Orange County, and Los Angeles. Contact us at 855 257-7671 to schedule a free consultation with our experienced bankruptcy attorneys.