People who have always thought of bankruptcy as a way to eliminate all debts in one fell swoop are surprised when they see information about five-year payment arrangements with creditors in bankruptcy proceedings. That may seem like a dream come true, as it would allow them to pay back the money they owe in a manageable way. Seeking help for debt relief in Gainesville, GA often involves consulting an attorney and developing this type of payment program under the chapter 13 bankruptcy plan.
About Chapter 13
This type of debt relief in Gainesville, GA takes all the outstanding debt that qualifies for the program and divides it up so that one payment is made to a trustee each month. The trustee distributes the payment among the creditors. The arrangement can last up to five years.
Important Considerations
The individual must have a certain level of income to qualify for this program. In addition to catching up on back payments, staying on current obligations is also required. This can be very difficult if the person is behind on a mortgage, car financing and child support. This individual may also owe substantial money on credit cards and personal loans.
Chapter 13 can be ideal for someone who had specific reasons for falling behind but now is in a financial situation that has recovered dramatically. It may not be possible to fulfill current demands from all the creditors, but the bankruptcy repayment program extends those obligations out over a feasible time frame.
Credit Rating Implications
People commonly worry about what filing for bankruptcy will do to their credit record. However, they must realize that being chronically behind on various payments and having a high debt-to-income ratio has already damaged their credit substantially. It’s true that a bankruptcy petition will not be favorable for the credit report, but it gives the person the chance to start rebuilding their overall financial stability.
Attorneys with a firm such as Chris Carouthers & Associates provide free consultations to people struggling with debt and wondering whether chapter 13 would make sense for their situation.
