Exploring different bankruptcy options is helpful for those facing overwhelming debt to do. By understanding the different personal bankruptcy protection options available, those considering filing for bankruptcy can determine the best option for them.
Focusing on Chapter 13 bankruptcy, it is sometimes referred to as the wage earner’s bankruptcy because it is available to help those who have a reliable source of income they can use to repay their debts. Chapter 13 bankruptcy can help the filing party develop a repayment plan that reorganizes their debts so they can be repaid during a more manageable period of time which is usually three to five years. If the filing party’s income is less than the state’s median income, the repayment period will generally be three years.
Chapter 13 bankruptcy has the advantage that it allows the filing party to repay their debt over time according to the installment plan worked out, and approved by, the bankruptcy court. The same protections, including the automatic stay to prevent creditor collection actions, and the debt discharge, at the end of the bankruptcy process, still apply. Unlike a Chapter 7 bankruptcy process, the filing party will generally be able to retain their assets. During a Chapter 7 bankruptcy, non-exempt assets are liquidated to repay creditors.
Chapter 13 bankruptcy protection offers different advantages those considering filing for bankruptcy should be familiar with. Because of the utility of the Chapter 13 bankruptcy process, those considering it should understand how to qualify, how it works and how it can help them enjoy debt relief.