If you are feeling like you are in over your head financially and unable to pay your bills, you may be wondering if Chapter 13 bankruptcy is a good solution for your situation. Here is what you should know about Chapter 13 and how it may help you.
Bankruptcy is a good debt relief option for people unable to get their debts under control because they cannot afford to pay what they owe. Unlike Chapter 7, where you may have some or all your debts discharged, Chapter 13 makes it possible for you to restructure them so it is easier for you to make timely payments. The repayment period is no longer than five years.
Retain possession of property
Chapter 13 allows people to keep certain assets like their homes and cars that they may still owe money on without fear of foreclosure and repossession. It also provides protection so that certain properties and assets you already own do not have to be sold off to satisfy outstanding debts. Of course, delinquency while you are in bankruptcy repayment may result in the repossession or foreclosure of your assets and properties.
Allows for negotiations with creditors
Creditors may legally attempt to collect payment for any debts you owe them. These attempts include sending demands for payment by mail, contacting you by phone and filing lawsuits to garnish your bank accounts and wages. Chapter 13 bankruptcy stops creditors from pursuing further collection activity against you. It also allows you to negotiate with all your creditors for lower payments based on your ability to pay.
Establishes repayment plan
The courts will evaluate your entire financial situation and work with you to create a repayment strategy. A valid Chapter 13 repayment plan must meet certain criteria for it to remain in effect. The courts will establish the repayment term according to your income and other criteria. Certain debts such as child support, taxes and alimony must be paid off first and completely because they take priority over other debts. Any assets you want to keep that you are behind on must be brought current by the end of the repayment term.
Chapter 13 bankruptcy is not a viable solution for everyone. It may be beneficial for those who simply want to regain control over their financial situation, keep their assets and establish a positive repayment history with their creditors. If you want to learn more about Chapter 13 or another type of bankruptcy, speak with an attorney who has experience with the matter.