Over the past few years, a growing number of Indiana residents have filed under Chapter 13 to help them with unmanageable debt. Chapter 13 is more complicated than Chapter 7, but it also prevents the liquidation of valuable assets during your bankruptcy. In some cases, an individual may have too much equity in their home or make too much money to file under Chapter 7. Below, we will discuss Chapter 13 bankruptcy and why it is becoming a popular choice among Indiana residents.
Simple Repayment Structure
In a Chapter 7 bankruptcy, your unsecured debts are discharged. However, Chapter 7 bankruptcy has a much worse impact on your credit rating than Chapter 13. It also means that any valuable assets that you cannot protect will be liquidated to repay creditors. Chapter 13 allows a debtor to repay their creditors over a period of three to five years. The repayment plan is based on the debtor’s disposable income. In many cases, you will not be required to pay the entirety of your debt, and some of your unsecured debt can be discharged in Chapter 13. By offering a simplified repayment plan, it offers many debtors the means to regain control of their finances.
Bankruptcy for Those Who Earn More Than the State Median
To qualify for Chapter 7 bankruptcy, you must make less than the state median. Many Indiana households that are filing for bankruptcy have incomes in excess of the state median. Chapter 13 offers them the best possible outcome when it comes to filing for bankruptcy. In Chapter 7, you must be able to pass a means test that compares your income to the state median. If your income is higher than the state median, you can sometimes still file under Chapter 7, but in general, Chapter 7 bankruptcies will be closed off. That means that Chapter 13 offers the only viable solution to filing for bankruptcy.
Inflation of Housing Prices
Inflated housing prices are now playing a significant role in which chapter of bankruptcy Indiana residents prefer to file under. A surge in property values has contributed to this phenomenon. With a surge in property values, many Indiana residents have a great deal of equity in their homes. This equity can create problems when attempting to file under Chapter 7.
Chapter 13 is designed to help debtors manage secured debt. This includes mortgage payments and debt related to motor vehicles. For that reason, it can help a debtor save their home from foreclosure. Chapter 13 allows them to restructure their debt into manageable lump-sum payments over a period of three or five years. In these cases, Chapter 13 may be the best available option.
Need to Save Your Home from Foreclosure? Call an Indiana Bankruptcy Attorney Today
Chris Arrington represents the rights of those who are seeking to save their home from foreclosure. A Chapter 13 bankruptcy may help you accomplish this. Call our office today to schedule an appointment, and we can begin discussing your best moves immediately.