Kentuckians can find themselves facing financial challenges in myriad ways. For some, there are unexpected medical expenses that grow out of control. Others spend beyond their means and have trouble keeping up with the payments or cannot keep up with them at all. Still, others lose their jobs and find themselves using credit to make payments until they reach their limits and have nowhere else to turn. Any financial situation in which there are problems keeping up with creditors can be problematic. For many, bankruptcy is a sound strategy to deal with the situation. Understanding the chapter that is preferable for the individual case can be difficult. Having legal advice is critical in these circumstances.

For people who own a home, a vehicle and other items of value and want to retain them, Chapter 13 bankruptcy is the wise alternative. Unlike a Chapter 7 liquidation, Chapter 13 formulates a payment plan that the debtor must complete in three to five years. The amount of time it will take for the plan to be completed is contingent on the debtor’s income. Most cases are for five years. Chapter 13 is beneficial because property will not be taken and sold off to pay creditors as it would with Chapter 7. The payments are sent to a Chapter 13 trustee who will pay the creditors.

With Chapter 13, a foreclosure on a property can be stopped. It can also clear mortgage payments that had fallen into delinquency. The debtor is obligated to make the payments on time and in full. With Chapter 13, secured debts can be rescheduled, so payments can be lowered. People are eligible for Chapter 13 provided their unsecured debts are below $394,725. Secure debts must be below $1,184,200. The amounts change periodically and are based on the consumer price index.

People who are dealing with overwhelming debt and are worried about foreclosure and losing everything should understand the benefits of Chapter 13. Having legal advice throughout the process can give a debtor peace of mind and be beneficial in the short and long-terms. A law firm that has experience in helping clients get their finances in a stronger position should be called regarding Chapter 13 for advice.