Millions of Americans still face financial hardship despite the slowly improving economy. Forbes reports that the national unemployment rate finally fell below 9 percent in November 2011, but many families in Washington still face an uncertain future as the possibility of foreclosure hangs over their heads. In fact, according to Forbes the four largest U.S. banks currently hold nearly $80 billion in residential loans in the foreclosure process, with billions more anticipated in 2012.
With the holidays now behind us, it is time for individuals and their families to begin planning their finances for the next year. For many, this will be an arduous task. However, millions of Americans have taken advantage of the benefits of Chapter 13 bankruptcy, which could be a viable option for you as well.
Chapter 13 Bankruptcy: How Do I Qualify?
Chapter 13 bankruptcy is unlike Chapter 7. Chapter 7 is reserved for those who truly cannot repay their creditors and uses liquidation, a process whereby people sell some of their assets to repay their debts. Chapter 13, however, uses a three to five year repayment plan and all property remains in control of the debtor - including the family home.
During the repayment period, a debtor slowly repays creditors using his or her disposable income, and all remaining dischargeable debts are wiped away at the end of the plan (assuming all payments are made on time during the repayment period).
Both creditors and debtors typically prefer Chapter 13 to Chapter 7 - creditors usually receive more than if a debtor had filed under a different chapter, and debtors enjoy retaining all of their property they worked so hard for.
Additionally, filing for bankruptcy offers instant benefits as well. All creditors must immediately stop all collections activities because an "automatic stay" is initiated as soon as the bankruptcy petition is filed. Creditors face severe consequences if they violate the stay, so debtors can breathe a sigh of relief knowing they are free of harassing calls at all hours of the day.
Next Steps
Bankruptcy is governed by very complex statutes. A qualified Washington bankruptcy attorney can provide valuable advice and guidance as you start on your path to financial recovery. Contact a local lawyer to discuss whether bankruptcy is right for you and what options you might have.
