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Chapter 13 bankruptcy allows one to reorganize budget

Financial problems can be caused by a number of reasons. Perhaps a source of income has been reduced or lost. Sometimes medical bills are the problem, and for some Kentucky residents, credit cards become a source of trouble. Rather than allow the bills to continue to pile up and the creditors to continue calling, it may be time to do something about the financial concerns. For some, filing for Chapter 13 bankruptcy may be the answer.

Chapter 13 bankruptcy allows the individual to reorganize his or debts. Under this plan, a repayment plan is established over a three- or five-year time period. This time period is based upon the individual's income over the preceding six months and the median income for the state.

In setting up a payment plan, priority debts are paid first. These include debts such as taxes and child support. The next debts that are included are secured debts such as a home mortgage payment and car payment. Finally, if there is any disposable income remaining, it will be used to pay unsecured debts such as credit cards.

At the end of the payment plan period, remaining debts are generally discharged by the bankruptcy court. For this to occur though, the Kentucky resident must be current on any non-dischargeable debts. Additionally, he or she must have completed the required counseling course.

Filing for Chapter 13 bankruptcy allows the individual to get out from under mounting debt. It gives the individual the opportunity to reorganize his or her budget and begin to plan for the future. The first step in deciding if Chapter 13 bankruptcy is the answer is to discuss the situation with an experienced bankruptcy attorney.

Source: FindLaw, "Chapter 13 Reorganization Bankruptcy", Accessed on Dec. 2, 2016

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