After years of striving and working to purchase a home and car and to invest in retirement, it can be disappointing to see your finances take a dive. You may be hit with an unexpected injury or job loss that eats up your savings or hinders your ability to earn money. Or your debt could slowly build up after using credit cards to take care of emergencies and other expenses, despite making good money. Before you know it, your debt could get to a point that it’s impossible to keep up with even minimum payments. If you have a substantial income or feel strongly about keeping your property, you may worry that bankruptcy isn’t an option for your debt problems. The good news is that there’s a chapter of bankruptcy for just about every situation.
Deciding How to File
When we meet to discuss your situation and options, we’ll first conduct the means test, which will help us decide which chapter will be the best fit for you. Consumers who have a high amount of debt but not much income available will pass the test and qualify for a Chapter 7. This type of bankruptcy discharges most types of unsecured debts almost immediately. Even people who qualify for a Chapter 7 may instead choose a Chapter 13 in order to save their home or other valuable property. In order to qualify for a Chapter 13, you must have less than $383,175 in secured debt and $1,149,525 in unsecured debt, whether you’re filing alone or with a spouse. If your debt exceeds these amounts, don’t give up hope; you may be able to file a personal Chapter 11 bankruptcy.
Personal Chapter 11
Corporations and LLCs are most likely to utilize the relief of a Chapter 11, but individuals and couples are also able to file. A Chapter 11 works almost the same as a Chapter 13, but without the limits on the debt that can be included. You’ll keep your property as a “debtor in possession” and be put on a 3-5 year repayment plan, as in a Chapter 13. You will negotiate with your creditors to create a new loan that covers all your debt that you’ll pay over the course of 3-5 years. The court will need to evaluate your plan and is ultimately responsible for approving or denying your proposed plan. Once your case is resolved, you will have paid far less than you originally owed while keeping your property. A Chapter 11 will stay on your credit report for up to 10 years, but for many people, this is a small price to pay for the new start they receive.
Here to Guide You
For consumers who have ended up in excessive debt but are ineligible for a Chapter 7 or 13, a personal Chapter 11 may be just the right solution. When we meet, we’ll discuss all of your options and come up with a plan together to make a new financial start.