Bankruptcy is usually deemed as your last resort – the only option to save you from drowning in debt. However, bankruptcy is an incredibly common option for most families and adults who are struggling with their finances.
You don’t have to be in dire circumstances to apply for bankruptcy, especially if you’re concerned about a specific income bracket for your bankruptcy applvication.
What does bankruptcy look like on a regular income?
One of the best options for regular income earners is Chapter 13, a specific chapter of bankruptcy that allows individuals with a regular salary to repay all or parts of their debt. Normally, an applicant works with creditors to develop a payment schedule over a limited period and protect their major assets, such as cars or homes.
Under U.S. law, any individual who receives a consistent paycheck, whether it’s through an employer or self-employment, qualifies for chapter 13 bankruptcy. There isn’t a specific income restriction for debt relief, but there is a limitation in how much debt you relieve through a claim, roughly over $394,000 in unsecured debt and less than $1,184,000 in secured debt.
This makes chapter 13 the right option for those applicants who make a regular income but do not have an excessive amount of debt to conquer.
Bankruptcy saves people from drowning in debt, but it also allows people the time and space to address financial struggles that aren’t as serious. If you want to consider bankruptcy as an option, you should consult with an attorney to determine the right chapter for your circumstances.