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There are debt limits in filing for Chapter 13 bankruptcy

Every day, the typical Kentucky resident gets up and goes to work. After a long day of taking care of things on the job, it is time to go home and take care of things there. For many, this scenario plays out day after day with no major obstacles. However, for some, something happens, and the financial picture changes drastically. Rather than being able to pay the bills, financial struggles come into the picture, and filing for Chapter 13 bankruptcy may be the best way to alleviate the struggle.

Chapter 13 bankruptcy was designed to provide relief for those individuals who have a steady income but for some reason struggle to pay the bills. Under Chapter 13, the individual is allowed to restructure debt and establish a repayment plan spread out over a three to five year period. The benefit of this plan is that the individual is able to retain property and other assets that may be lost otherwise. At the end of this time period, remaining debt, depending upon its type, can be discharged.

Recently, however, some have questioned the debt limits associated with Chapter 13 bankruptcy. Currently, someone applying for this type can have secured debt of no more than $1,149,525 or unsecured debt of no more than $383,175. While these numbers may seem high to some, some mortgages are greater than this secured threshold. The fact that one was once able to obtain this mortgage does not mean that some tragedy will not occur that can make meeting monthly obligations a challenge.

Critics of these limits claim that there is no legitimate foundation for these specific numbers. Therefore, they propose that these limits be raised. As of right now, these limits do apply to Kentucky residents who can benefit by filing for Chapter 13 bankruptcy.  Legal counsel can help determine if this is the best option.

Source: bna.com, "Chapter 13 Debt Limits Should be Raised or Eliminated, Some Say", Daniel Gill, Oct. 18, 2017

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