If you are facing large amounts of debt but have a steady, consistent income, you may be able to find debt relief by filing a Chapter 13 bankruptcy. In contract to a Chapter 7, Chapter 13 does not erase all of your debt immediately. Instead, you and your creditors agree on a 3 to 5 year repayment plan. In order to qualify for a Chapter 13, you must meet certain debt and income requirements in addition to various other criteria.
If you are eligible, filing a Chapter 13 bankruptcy offers several benefits. Firstly, it allows you to regain control over your debt and make manageable payments over a certain period of time. Secondly, it allows you to keep most, if not all, of your assets and properties. Because of this, filing for a Chapter 13 is arguably one of the best ways to stop foreclosure on your home or repossession of your car. Chapter 13 allows you to reschedule certain debts for the duration of your repayment plan, thereby reducing the amount of each payment. It also ends the direct contact with creditors: you make payments to the bankruptcy trustee and the trustee will then distribute these payments to creditors on your behalf.
A chapter 13 is a complex process and is much more complicated than a Chapter 7 bankruptcy. Once you file your case, you will need to also file your Chapter 13 repayment plan. This plan must meet certain specifications and your creditors will be allowed the opportunity to either accept or reject your plan. If the plan meets certain requirements and the trustee and creditors do not object, then the court will confirm your plan. Once your plan has been confirmed, you must complete repayment in the designated timeframe (three or five years). Only after you complete your repayment plan will the court discharge your debts and close your case.
If you are considering filing for bankruptcy, it is wise to speak with an experienced attorney who can help you weigh your options and fully understand the various pros and cons associated with each type of bankruptcy. At Burgess Law Firm, our office is prepared to answer your questions, address your concerns, and provide you with compassionate, personalized service throughout the legal process.