No American wants to be associated with bankruptcy as it signifies financial hardship. Surprisingly, bankruptcy can help you reorganize your financial situation. It provides some form of relief from debt collection. Unfortunately, people don't understand the basics of bankruptcy. As such, this article will offer valuable insights into Chapter 13 bankruptcy and what it entails. 

What's Chapter 13 Bankruptcy? 

With Chapter 13 bankruptcy, getting a deadline extension to pay your debts is possible. The courts will add more time (not exceeding five years) to clear your debts without losing your assets. However, you must prove your earnings are steady to qualify for Chapter 13 bankruptcy. The bottom line is your debts won't be forgiven, but you'll get three or five more years to pay your debts. 

Who Is Eligible?

As mentioned earlier, you must demonstrate your ability to pay off your obligations by demonstrating a reliable source of income. To qualify, you must be employed, running an unincorporated business, or self-employed. The courts will then evaluate your wages to set the repayment plan. Remember that all your secured and unsecured debts shouldn't surpass $2,750,000 by the time you apply for Chapter 13 bankruptcy.

Do You Need an Attorney?

Chapter 13 bankruptcy doesn't dictate that you hire an attorney. You can file without the help of an attorney. However, you may miss out on crucial benefits if you fail to engage a Chapter 13 bankruptcy attorney. These professionals will increase the chances of your petition or application approval

Moreover, they'll offer all the help you need during the application phase. At least you won't have to fret about making mistakes that may delay the approval. Finally, your attorney will help you with all the required paperwork. 

Does Chapter 13 Forgive Bills?

As you make your monthly Chapter 13 payments, you must continue paying your bills. That's why you ought to have enough disposable income when applying for Chapter 13 bankruptcy. Therefore, you'll have to sort out the following bills:

• Insurance
• Property tax
• Alimony
• Car and house payments that aren't in your Chapter 13 plan
• Utilities
• Child support

Why Would a Court Reject a Chapter 13 Bankruptcy Application?

The court will only reject your application because you don't meet the eligibility requirements, which include:

• Low income
• You are a business entity applying for Chapter 13 instead of Chapter 11
• You just had a Chapter 13 debt discharged 

If you fail to qualify, you can try filing for Chapter 7 or Chapter 11 bankruptcy.

For more information, consult with a bankruptcy attorney.