A lot of people assume that with Chapter 13 bankruptcy they have to repay a lot of their debts, and that the more debt they have, the more they will necessarily have to "pay back" in Chapter 13. This is a case of the consumer over-complicating the process; and the consumer loses out from their misunderstanding. In short, a Chapter 13 bankruptcy payment is not based on how much you owe, but how much the government's calculator - with all of its curious equations - says you can afford to pay back. A person with 100,000.00 of credit card debt would likely not have to pay back any more than a person with $25,000 of credit card debt, if all other factors were the same - because the payment is based on how much you can presumably *afford* to pay.
And most people we see can't afford to pay much of anything back - so they really shoot themselves in the foot when they wait too late to get legal advice. Don't let the amount you owe be a deterrent to investigating your bankruptcy options. In fact, one of the problems we see the most is actually people waiting until they owe less - they let their house go into foreclosure or do a short sale, and come see us after someone sues. We'd estimate that 95% of the time, the government's calculator would indicate these individuals who waited too late can now **afford to pay more back** all of a sudden! As they say, no good deed goes unpunished. Don't try to let someone else fix your debts through foreclosure or short sale before you inevitably need to fix them yourself by filing bankruptcy, or you could end up spending a lot of money. Our clients need their money for their cars and future medical expenses more than credit card companies need it.
This is a case of the bankruptcy process giving you just the opposite of what you hoped to get in exchange for giving in to your creditors sooner. You reduce your debts, and as a consequence, might very well have to pay a lot more back when you file bankruptcy. The easiest solution? Get some bankruptcy advice even if you think you may not eventually need to file. Just as with anything else in life, an ounce of prevention can be far, far less expensive than a pound of cure.
An individual with an above-average income is likely to end up having to pay back a substantial portion of his or her debts if their property is let go to foreclosure. Why? Because if you don't have a mortgage payment, the government figures you have some extra money around to pay back some more towards your Visa or Mastercard, or that nasty creditor who got a default judgement against you. Don't procrastinate when your debt situation becomes unmanageable. -honakerlegal
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