Many people looking for help with their debts assume that the bankruptcy process can grant them a quick and easy out for their debt payments. While the Dayton bankruptcy process is designed to be a tool for protection for the debtor, there is more to the process than a simple banging of the court gavel. In fact, there are a variety of factors that can influence the outcome of your case; one of which is the Chapter you file under.
Inside Chapter 13
Although most people assume they need their debt erased quickly through a Chapter 7 filing, there is actually much to be gained from considering a Chapter 13 filing. First, not everyone qualifies for Chapter 7. There are strict income requirements that must be met in order to be eligible for Chapter 7, whereas a Chapter 13 case can benefit just about anyone. Further, not all debts are best handled in Chapter 7. Many secured debts, like a mortgage or car loan, are better managed under a Chapter 13 repayment plan. This is especially true if you intend to keep the property and it is unable to be protected through as an exemption. Also, not all debts are eligible for bankruptcy, but could be considered a part of a Chapter 13 filing in extreme cases.
In a Chapter 13 plan, the court takes into account your income, assets, debts and fund accounts to gain an understanding of your overall financial position. Your disposable income will be used to determine a monthly payment amount that you will be required to repay. This amount is adjusted according to a scale set by the court that is deemed affordable for your income level. These payments can be spread out over the course of up to five years. Although this may seem like a longer process for debt relief, spacing out the payments ensures they are low enough to not further burden your financial state as you work towards repayment. Further, having repaid your debts over time is viewed more favorably in the eyes of your future creditors, as compared to having debts quickly liquidated.