Clients who fail the bankruptcy “Means Test” and have to file a Chapter 13 bankruptcy case look at me as though they have been given a death sentence. I reassure them that Chapter 13 bankruptcy is not the end of the world.
The fact of the matter is that they are almost always usually much better off in Chapter 13 then they ever would have been without filing bankruptcy at all. If you fail the means test, you may not be able to file a Chapter 7 bankruptcy. While the thought of filing Chapter 7 and walking away from all unsecured debts is tempting, Chapter 13 can reduce payments to a very low percentage of what is owe.
Chapter 13 bankruptcy plans consolidate all payments into one payment, so many people find that it is easier not having to worry about juggling payments. There are many advantages to Chapter 13 bankruptcy. Long term protection from creditors, ability to cure past due debts over time, a payment plan that is based upon income and ability to pay instead of amount of debt, and it is modifiable. If things get worse, Chapter 13 debtors might be able to convert (switch) to Chapter 7 or lower payments even further.
See also:
“Median Income” & “Means Test” – Important terms defined By Jonathan Ginsberg, Atlanta Bankruptcy Attorney
Claims That Bankruptcy Will Not Stop Foreclosure Are Not Only False, But Absurd By Jay Fleischman, New York Bankruptcy Lawyer;
Lie of the Day: “Bankruptcy Won’t Stop Foreclosure For Troubled Borrowers” By Brett Weiss, Maryland Bankruptcy Attorney
No related posts.
Comments on this entry are closed.