Credit card debt is one of the most common types of consumer debt. When the balance gets unmanageable, people often seek out a bankruptcy attorney for financial relief. Filing a Chapter 13 bankruptcy can help gain control of your credit card debt.
Chapter 13 Bankruptcy
Chapter 13 is often called a reorganization bankruptcy. In this type of bankruptcy, you keep all of your assets and make a plan with the court to repay your debt. The repayment plan can last for three to six years, depending on your income and level of debt. You will make one monthly payment to your trustee and distribute the money to your creditors.
Your debt will be sectioned into three different classifications. The order of repayment is as follows.
- Priority debt
- Secured debt
- Unsecured debt
Since unsecured debt has the lowest priority, this type of debt is only paid if you can afford to. The bankruptcy court has the ability to reduce your unsecured debt.
How Much to Pay Back
The amount you will pay towards your credit card debt depends on your income, the repayment period, and how much priority debt you owe. Calculate what you will pay, take your budget, lower expenses, and prioritize and secure debt. Any money leftover from your budget will go towards your unsecured debt. At the end of your Chapter 13 bankruptcy, any remaining unsecured debt will be eliminated.
If you are overwhelmed in credit card debt, or creditors are threatening to take you to court to get a judgment or garnish your wages, contact a Fort Worth bankruptcy attorney to stop the creditors from calling and get you financial relief.