Chapter 13 Bankruptcy: What You Should Know

Posted on: 8 July 2019

There are many people in America who are overwhelmed with personal debt. If you are in over your head with your finances, you may be able to obtain financial relief by filing Chapter 13 bankruptcy. If you are not familiar with this type of bankruptcy, read on to learn more about it and how it can help you get debt-free.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is often referred to as "wage earner's bankruptcy" or "debt consolidation bankruptcy", and this particular form of bankruptcy is a way for those in debt to repay their personal debts without having to give up any of their personal property. Individuals who go through this type of bankruptcy will need to have a steady and stable income. Chapter 13 bankruptcy is only for individuals, meaning that businesses — even sole proprietorships — are not eligible.

Why Should You File Chapter 13 Bankruptcy?

With Chapter 7 bankruptcy, debtors are required to liquidate their assets in order to pay their creditors back. However, with Chapter 13 bankruptcy, you will have an extended timeframe to pay your creditors back the amount that is owed to them. Generally, this timeframe is three to five years. In addition, filing for Chapter 13 bankruptcy will protect your personal assets against repossession and foreclosure. While Chapter 7 bankruptcy will appear on your credit for 10 years, Chapter 13 bankruptcy will only remain on your credit for seven years.

How Exactly Does the Bankruptcy Process Work?

Your first step is to contact a professional bankruptcy attorney in your area to help you assess your situation and determine if you qualify for filing for Chapter 13 bankruptcy. If you are eligible to file, the lawyer will assist you with the filing process. You will be fully responsible for paying the attorney and filing fees, in addition to the fees for the mandatory classes that you have to take for credit counseling. Your next step is to go to court with your lawyer and present them and your creditors with a plan for repayment. If the court decides that the repayment plan is fair and feasible, then the plan will be approved by the judge. Once repayment has been completed in full, you will undergo a course for personal finance management.

If you are dealing with serious debt problems and can't see the light at the end of the tunnel, it is time to schedule a consultation with a chapter 13 bankruptcy attorney to discuss your options. Contact a resource like Haven Law Group, P.C. in order to learn more.