Income, Assets and Bankruptcy
A Chapter 13 Bankruptcy is usually filed by people that have fallen behind on their house or car, They make to much money to qualify for a chapter 7, or have assets that are an issue.
Once you fall so far behind on the house the mortgage company will try and work something out with you to pay the money back over the next year, but this is not always affordable. The chapter 13 will give you over the next five years to pay this money back.
To file the chapter 7 bankruptcy there needs to be no disposable income in which you could pay the unsecured creditors money. If there is money left after paying your basic bills then the chapter 13 is the way to pay the creditors only the disposable income over 5 years. The creditors have to accept whatever amounts the courts decide you can pay.
Assets are the third reason a person would file a chapter 13. Different states have what assets you’re allowed to protect. A quick example would be your house is paid for your car is paid for and you have a boat worth 10,000 dollars. If you file the chapter 7 the trustee would want the boat to sell and give to the creditor and in the chapter 13 you could pay at least 10,000 dollars to the creditors and keep the boat.
This is why talking to a bankruptcy attorney is so important when there has been a major change in your income.
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