Chapter 13 eligibility
It is very important to note that chapter 13 is not for everyone. Unlike chapter 7, chapter 13 requires you to use your income in order to repay some or all your debt. As a result, you actually have to prove that you can actually afford to repay all your debt. This means that if your income is inconsistent or too low, then the court will not allow you to file for chapter 13.
How much must you pay and how long will your repayment plan last?
In chapter 13 certain debts must be paid in full. Such debt are known as priority debt and include debt like child support and alimony as well as certain tax obligations. The plan must also show that all disposable income that is left after you have paid priority debt will go towards repaying unsecured loan such as medical bills and credit cards. On the other hand, the length of repayment actually depend on your income as well as the amount of debt that you have. This means that if you monthly income is low and your debt is high, then your repayment plan will actually be long.
Benefits of chapter 13
· It give you the opportunity to save your home from foreclosure
· You individual credit report is shown for a short period of time when compared to chapter 7
· It removes a second or higher mortgage
· It allows you to pay what you can afford.
Challenges of chapter 13
· It affects your credit score negatively
· It does not provide total discharge of debt
· It impacts negatively on your ability to get employment in future.