What Is Chapter 13 Bankruptcy?
When most think of the word bankruptcy they think of Chapter 7. Many people end up learning about Chapter 13 bankruptcy when they don’t qualify for Chapter 7. Chapter 13 bankruptcy is probably the most misunderstood chapter of bankruptcy. When filing Chapter 13, it is required to propose a 3 to 5 year repayment plan and this scares many individuals away. Most people don’t realize it, but where Chapter 13 bankruptcy really shines is when an individual is trying to protect their property. Rarely in a Chapter 13 bankruptcy does the debtor have to give up any property unless they choose to. When a debtor files for Chapter 13, they are in the position to negotiate a plan of reorganization, allowing the debtor to catch up on back payments over the 3 to 5 year period.
A Chapter 13 bankruptcy will also eliminate many unsecured debts. Depending on your income, if all you can afford to pay is your secured debts by the end of the payment plan, the unsecured debts will be wiped out. In a Chapter 13 bankruptcy the debts are paid by priority, with secured debts being paid first and the unsecured get whatever is left over, if anything. With a Chapter 13 bankruptcy, as along with all other forms of bankruptcy, the debtor is protected by the automatic stay as soon as the bankruptcy case is filed. The automatic stay is one of the most powerful benefits of a bankruptcy filing. When a bankruptcy is filed this injunction is filed and all collection attempts by creditors must be stopped. A creditor can’t even contact the debtor without being in violation of the automatic stay. A Chapter 13 bankruptcy has many benefits when used to its full extent. It’s important to consult a bankruptcy attorney to evaluate your situation and see if Chapter 13 will benefit you.
The decision to file bankruptcy is very serious and should be well thought out with the help of a professional. Once the decision is made, many express the feeling of relief, knowing that the creditors can no longer harass them. When it’s all done you feel like a huge weight has been lifted off you as you begin trying to live your life debt-free. Get on the road to financial freedom by taking a moment to fill out the form below and get a FREE NO OBLIGATION CONSULTATION from a local bankruptcy attorney.