Chapter 13 can work for you, as long as you are working

Too many people make the mistake of believing debt and bankruptcy are issues that only affect Floridians who are irresponsible with money or unable to pull in a steady paycheck. However, not only is that an inaccurate assumption, it is also a dangerous one in that it can make people hesitant to reach out and get much needed support.

The truth is millions of people across the U.S. are struggling with debt and many of these people have jobs and practice responsible spending. Sadly, all it takes is a missed mortgage payment, unexpected medical expenses or penalties from a late credit card payment for a financial situation to get out of control. If this sounds similar to your situation, you should know that you are not alone and there are ways to tackle this problem and find a resolution.

For example, if you are working and struggling to make your paycheck cover added expenses every month, you may want to consider filing for Chapter 13 bankruptcy protection. This is often referred to as a “wage earner’s plan” because rather than discharging your debt, it allows you to reorganize it in such a way that you can pay it down.

Chapter 13 bankruptcy allows a person to work out a plan with creditors by reprioritizing debt. Higher priority debts will be paid first and then the remaining debts will get paid for either five or seven years. In some cases, not all the debt is paid off. But the fact that creditors can receive something through Chapter 13 versus the complete loss they can take if a person files for Chapter 7 means both sides to share an interest in Chapter 13.

However, the rules of this debt relief option are very strict. You must keep up with the agreed-upon payment schedule and make payments in full. Failure to do so could have serious repercussions, including a court order to dismiss the case or convert it to a Chapter 7 bankruptcy.

This is why it is so important to have a job as it will give you the reliable income you need to support yourself and your repayment plan. If this sounds like a resolution in which you may be interested, it can be wise to discuss your debt relief options with an experienced lawyer.