Unsecured Debt in Chapter 13 Plan Explained

Major Advantages of Debt Settlement Like Paying Less Than 50% Filing a Chapter 13 bankruptcy eliminates most unsecured consumer debt. Unsecured debt includes credit cards, personal loans, store accounts, certain medical bills, and cell phone bills. This type of debt means that property was not used as collateral to secure the loan. The property remains protected from being taken from the debtor in order to pay for unsecured debt. A Chapter 13 bankruptcy is filed when consumers are unable to pay debt based on an income to debt calculation guide. Each state's bankruptcy laws are different and change often, so it is best to consult an attorney, who specializes in bankruptcy cases before making this decision. A bankruptcy filing is usually considered when too much unsecured debt cannot be paid in a timely manner. Financial reports indicate that when unsecured debt is more than $8,000 in a household that earns less than $50,000 a year, a Chapter 13 can be considered. This means of debt relief carries a negative impact of low credit scores for a few years. The laws for each state's residents can be easily accessed through online sites, and this information is a good beginning in the decision process, even before contacting an attorney.  Weigh the options before considering a Chapter 13 bankruptcy filing. Many times this is the only viable option to eliminate consumer debt. Usually a financial hardship has occurred that leads individuals to a Chapter 13 bankruptcy filing. Unemployment and salary reductions are sending consumers to the bankruptcy courts to eliminate overwhelming unsecured debt.