Filing for bankruptcy is a great way for those struggling with overwhelming debt to get relief. However, some people are hesitant about taking action to file, even when they are in desperate financial circumstances. This is often due to the stigma associated with bankruptcy. In addition, many prospective bankruptcy filers worry that they will lose their home when filing for bankruptcy.
If you are in a situation where you are considering filing for bankruptcy, it is a good idea to gain an objective overview of the process. By learning for yourself the benefits of bankruptcy and the difference between Chapters, you will be able to make a decision in your own best interests.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a filing that is based upon the creation of a repayment plan. Chapter 13 bankruptcy filers have the opportunity to benefit from an automatic stay. This means that creditors must stop all debt collection activities for the foreseeable future. This allows debtors to reorganize the debts they owe and find ways to repay them over a more realistic time frame, without incurring additional interest or late fees. Usually, it takes a Chapter 13 bankruptcy filer between three and five years to repay their debts. After the repayment plan is completed, any remaining debts will probably be discharged.
Who can benefit most from Chapter 13 bankruptcies?
Those who have a stable and dependable income are usually advised to file for Chapter 13 bankruptcy. This is because they will be able to predict their income and budget accordingly to pay off their debts over time. In addition, those with a significant income will likely not qualify for Chapter 7 bankruptcy. Chapter 13 bankruptcy is also a great option for those who are facing foreclosure proceedings but who do not want to lose their homes. This is because filing for Chapter 7 bankruptcy will usually result in the liquidation of your home as an asset.
There are many different bankruptcy Chapters, and they are all designed with different debtors in mind. By reflecting on your own financial situation and learning about the advantages and disadvantages of the bankruptcy Chapter options, you will be able to take action to improve your situation.