To many people, the word bankruptcy conjures images of people with no money and no resources. However, successful individuals can also find themselves dealing with unmanageable amounts of personal debt. In fact, successful professionals often need to maintain a higher standard of living to protect their career, which may mean that they have to take on more debt than people working from home or running a ranch.
Everything from clothing to vehicles can affect how employees, employers and clients perceive a professional. Most people project success in the hope of attracting more of the same. When someone with significant personal assets and a decent standard of living finds themselves overwhelmed by debt, Chapter 13 bankruptcy can be a good solution.
People don’t have to liquidate assets in Chapter 13 bankruptcy
Perhaps the main reason that people associate bankruptcy with low-income individuals is that they think of Chapter 7 bankruptcy. Available for those who earn less than the median wage in their state, Chapter 7 bankruptcy offers a quick discharge of certain unsecured debts but at a price. People have to liquidate their personal assets to repay creditors before the courts will discharge their debts.
As someone with a valuable vehicle, a home or other personal property, you may not want to sell off your belongings to repay your debt. However, you may also recognize that you cannot actually repay everything that you owe at this point. In a Chapter 13 bankruptcy, you do not have to liquidate your assets.
How does Chapter 13 bankruptcy work?
You will work with a trustee appointed by the court and representatives from your creditors to create a repayment plan. You will make a monthly payment to the courts that the trustee will then distribute to your various creditors. After you make payments on time for months, usually at least three years, you become eligible for a discharge of the remaining balances on those accounts.
Without losing your property or failing to qualify because of your income, you can regain control of your finances and eliminate lifestyle-threatening collection activity. Filing for individual Chapter 13 bankruptcy can be a way for successful individuals saddled with too much debt to regain control of their finances.