Having credit card debt can feel like a burden, weighing you financially and emotionally. If you struggle to keep up with payments, Chapter 13 bankruptcy might offer a lifeline, allowing you to restructure your debts. You can also create a manageable repayment plan for easier payments. But is it the right choice to help you tackle your credit card debt?
How can you file for Chapter 13 bankruptcy?
You must meet specific criteria so you can file for Chapter 13 bankruptcy:
- Your unsecured debts are less than $419,275, meanwhile, your secured debts are less than $1,257,850
- You must have a regular income
- You must be current on your tax filings
Under the law, these debt limits are subject to change every three years. It is crucial to check the most recent figures before filing.
How does Chapter 13 bankruptcy work?
Chapter 13 bankruptcy, a “wage earner’s plan,” allows you to keep your assets so you can repay your debts over time. Here is how it works:
- You propose a three-to-five-year repayment plan
- The plan must cover all priority debts and secured debts
- You pay what you can afford toward unsecured debts like credit cards
- After completing the plan, you may discharge the remaining unsecured debts
Pennsylvania follows the federal bankruptcy code, but local rules may affect how your case proceeds.
How can Chapter 13 Bankruptcy help you rebuild?
You work with a trustee to create a repayment plan that lasts three to five years. During this time, your trustee collects and distributes regular payments to your creditors.
While Chapter 13 bankruptcy can hurt your credit score, it can provide a much-needed fresh start. Consider it if you struggle to pay your credit card debt. With an attorney, you can decide whether Chapter 13 bankruptcy is the right path to regain control of your finances.
