Filing for Chapter 13 bankruptcy may be an effective way of eliminating some or all of your unsecured debts. In many cases, you can retain possession of your Kentucky home or other property throughout the repayment period.

An overview of reorganization bankruptcy

To qualify for Chapter 13 bankruptcy, you must have less than $394,725 in credit card, personal loan or other unsecured debt balances. Furthermore, you must have less than $1,184,200 in mortgage or other secured debts at the time that you file your petition with the court.

It will also be necessary to certify that you haven’t had a petition dismissed within the past 180 days because you failed to appear in court. Finally, you will need to pay filing and administrative fees and take a credit counseling course within 180 days of seeking protection from creditors.

What to know about the repayment plan

You will be required to propose a payment plan that adheres to state law and is considered fair to your creditors. A judge will need to approve your plan before it can go into effect, and creditors will be given a chance to raise any concerns that they have about your proposal. Your monthly plan payment is based on your disposable income, and it is possible to make more than the minimum payment each month in an effort to obtain an early discharge.

There may be many benefits to seeking Chapter 13 bankruptcy protection such as obtaining an automatic stay of creditor collection activities. This may postpone a foreclosure, repossession or lawsuit until your case is discharged. In some cases, it may be possible to obtain new debt while your case is ongoing. An attorney may be able to talk more about your rights and obligations during a bankruptcy proceeding.