Filing for bankruptcy is a difficult decision, and a person considering this choice should weigh all their options. It is important to understand there is more than one type of bankruptcy, and one type may be far beneficial to you than the other. It simply depends on your individual situation. Today, we will discuss how chapter 13 bankruptcy works.
Here are the ABC's of Chapter 13 bankruptcy:
The person filing Chapter 13 is Allowed to keep property. This includes their house, car, etc.
One of the benefits of filing Chapter 13 is that it can save a home from foreclosure. Filing can stop the foreclosure process and presents the person a chance to catch up on past mortgage payments over a certain amount of time.
Unlike Chapter 7 - which requires the debtor to sell all assets - filing Chapter 13 allows a person to restructure their debts. This plan is a good option for those who hold jobs making a decent wage, but who are struggling to make their payments because of large amounts of debt, or who have fallen behind on their bills and cannot get caught up.
This type of bankruptcy requires making a Budget of debt payment and expenses.
The bankruptcy attorney will assist in hammering out a plan that includes the person's bills and reasonable expenses (utilities, transportation, insurance, etc). It is required to include a set amount of money in the plan. This cash will be paid to the trustee on a regular basis, which the trustee will then disperse to the debtor's creditors. The plan must be submitted 15 days after filing.
Creditors must be paid back. Once the court has confirmed the plan, the person who filed must begin making payments to the trustee, either directly or through payroll deduction. And, while it is possible for the debtor to keep some of his existing property, he cannot take on new debt during this time period without the permission of the trustee.
Chapter 13 bankruptcy is a good choice for a person who is gainfully employed but mired in debt, or who is trying to avoid foreclosure.
Contact us before making any decisions concerning bankruptcy. We will assist you in weighing your options.