Many Americans find themselves falling behind on their bills and struggling to catch up. People can overspend on their credit cards to hold themselves over in the short term but can make their debt worse because of high interest. Student loans and surprise medical bills are other common sources of financial strain.
If this sounds like you, you're not alone.
You may begin to feel the pressure once the debt collectors start calling or the bank begins threatening foreclosure. While your situation may feel dire, there is a possible solution to change your circumstances if you have income.
A way out
Chapter 13 bankruptcy is a great way for you to stop harassment from creditors and allow you to keep your home while you repay your debt over a three to five-year period. Having a repayment plan in place can provide peace of mind that you're gradually working to resolve your debt without the external pressures of debt collectors bearing down.
To qualify for Chapter 13, you must owe less than $394,725 in things like credit cards and have less $1,184,200 in debts like car loans or mortgages. You must also not have missed a bankruptcy-related court date or skipped your credit counseling in the past six months.
As a general overview, a court will want to see a list of your creditors, the income for you and your spouse, and a list of your monthly expenses. The court will also have your creditors join for a hearing to discuss your debts as you work to set a repayment plan. That court may then move forward with confirming a repayment plan.
You erase debt over time, not overnight
The burdens of debt can feel overwhelming but there is something that you can do about it. Chapter 13 can allow you to keep your home and stop creditor harassment over the next three to five years. There's no shame in acknowledging that you need help and a plan to improve your financial health.