Struggling with debt can leave you facing various struggles in multiple areas of your life. You may face constant contact with debt collectors and creditors, and you may wonder how you will ever get ahead on your own. When your debt becomes insurmountable, you may feel as if you will be struggling with your current financial problems for the rest of your life, but there is a way out. There are bankruptcy options available to you that will allow you to effectively confront your ongoing problems.
There are different bankruptcy options available to consumers, but Chapter 13 is a popular choice for individuals who have a large amount of secured debt. Often called wage earners’ bankruptcy, this bankruptcy option gives you the chance to pay off certain types of debt while following the terms of a court-approved bankruptcy plan. In some cases, Chapter 13 bankruptcy is the solution for various debt-related struggles.
A basic understanding of Chapter 13 bankruptcy
Chapter 13 bankruptcy is not the solution for everyone facing a large amount of debt, but it could be the preferred method if you earn enough income to make regular payments. It is most effective for those with significant secured debt, such as mortgage debt. Upon filing for bankruptcy, the automatic stay will go into effect, which halts all contact with debt collectors. Over time, you will make payments toward your debt, giving you enough time to fulfill your obligations without the harassment of debt collection efforts.
Each bankruptcy plan is different, but priority debts are typically paid in full first, including many types of tax debts. Unsecured debts, which are balances that do not have collateral, typically receive payment last. After all terms of the bankruptcy plan are complete, there is a discharge of any remaining debts. The entire Chapter 13 bankruptcy process takes around three to five years.
Is it right for you?
The right bankruptcy option for you depends on the types of debts you have and other factors. Chapter 13 could be a way for you to confront your debt while staying in your home and making payments over time. An assessment of your case will help you understand if this is the ideal option for you and how you can employ the benefits of bankruptcy to help you move forward to a better financial future.