Whether you've been living in your Austin home for only a few years or have enjoyed residence in your community for decades, facing a serious financial crisis that threatens foreclosure is never easy. In fact, it can be quite scary and overwhelming, especially if you think everything you've worked so hard to own might be at stake. The need for immediate debt relief is nothing new, as many business and/or homeowners have been where you are now. But finding the right solution to a particular problem can be quite challenging.
The good news is that by exploring various options for debt relief, you might be able to avert future disaster and craft a solution that points the way toward restored financial stability. The process can be a bit complicated as what works for one homeowner may not be the right idea for another. Many file Chapter 13 bankruptcy, which is often a viable option for avoiding foreclosure while paying off debt and restructuring payment plans so as to be able to retain certain assets.
How to determine if Chapter 13 is right for you
Unlike Chapter 7 bankruptcy, which typically liquidates all assets and removes all debt, Chapter 13 generally involves the debtor still being responsible for a portion of the debt. As with most forms of debt relief, there are certain eligibility requirements that must be fulfilled in order for the Chapter 13 option to be available. Meeting criteria such as those listed below might mean you are eligible:
- If you're not eligible for Chapter 7, which might be the case if your income for a certain amount of time before filing is higher than the average household income in your area or your income minus expenses is enough to make Chapter 13 payments, then Chapter 13 may be available to you.
- This form of debt relief is not available to business entities; although, in certain circumstances, a sole proprietor may file for Chapter 13 for his or her portion of a business's debt.
- Having already used Chapter 13 (in the past two years) or Chapter 7 (in the past four years) for debt relief means you are not able to file again under these options at this time.
- Your secured and unsecured debt must be within certain limits in order to fulfill eligibility requirements for Chapter 13 bankruptcy.
- Proof that you have filed tax returns for the past four years is also needed when considering the Chapter 13 option.
Another benefit of Chapter 13 is that it prevents creditors from contacting any co-signers attached to your outstanding loans for the purpose of collecting payments. In short, if you have enough income, your debts do not exceed set limits and your situation meets the other criteria, Chapter 13 bankruptcy might be the financial answer for which you've been looking to be able to keep your house, pay off your debt and reorganize your fiscal plan so you can get back on track.
Discharging debt through Chapter 13 typically unfolds over a three to five year period. Many others in Texas have used this option to avoid foreclosure and regain financial control of their lives. An experienced bankruptcy attorney can explain all options, laws and codes that pertain to your particular situation. Many find such counsel invaluable when facing serious financial crisis head-on.