Individuals may file for debt relief under either Chapter 7 or Chapter 13 bankruptcy code. Though Chapter 7 is the most popular, Chapter 13 offers more flexibility for homeowners who are having a hard time keeping up on their credit card payments but have the financial resources to make a payment plan.
Chapter 13 bankruptcy is often used when a homeowner is facing foreclosure. Federal law requires creditors, including mortgage lenders to cease collection activities when one of their customers files for bankruptcy protection. If your mortgage company is threatening to foreclose on your home, Chapter 13 can help you bring your loan into a current status and allow you to keep your property. By filing Chapter 13 bankruptcy St. Louis residents can also save their personal vehicle from repossession and prevent wage garnishments on taxes and student loans. Click here for the experienced Bankruptcy lawyers in St. Louis.
Many people choose to use Chapter 13 when the majority of their debts are secured. Because only unsecured debts can be discharged under Chapter 7, filing under that section of the law can leave someone with a mortgage, an auto loan, taxes, student loans or family support in just as bad of a financial position as before they filed. With Chapter 13, those secured or nondischargable debts can be reorganized into a reasonable payment plan. Unsecured debts may still be discharged at the end of the repayment period if they aren’t paid off.
In evaluating a person’s ability to file Chapter 13 bankruptcy St. Louis lawyers, such as Law Offices of Steven K. Brown, will apply a means test. This test evaluates a clients ability to make the minimum payments required under a debt reorganization plan. If you don’t have enough income to make monthly payments, you may not be eligible for Chapter 13. Your lawyer can discuss the alternatives with you and help you find a solution to your debt problem.
Financial counseling is part of the bankruptcy process. Whether you file for debt relief under Chapter 7 or Chapter 13, you will complete two financial education sessions to help you learn about responsible use of credit and how to budget your money so you can make better financial decisions in the future.
