Chapter 7 is most frequently used by individuals with few or no assets. If the consumer owns a house, a car with late payments or other assets of significance that they do not want to lose, filing chapter 13 bankruptcy is probably the most appropriate option. It is also an alternative for individuals who are not eligible for chapter 7 bankruptcy because they did not meet guidelines.
The Difference Between 7 and 13
A chapter 13 bankruptcy differs from that of chapter 7 in that it depends on a payment plan, which lasts from three to five years. The debtor’s payments to the creditors are consolidated and the debtor creates a monthly payment plan for the trustee who distributes the money between creditors. A chapter 13 bankruptcy lawyer can help clients decide how much they can pay.
A chapter 13 will also allow folks to retain their home or car by correcting arrears while, at the same time, discharging their entire debt. Bankruptcy protections can be a lifeline for individuals who are struggling to pay off mountains of debt. While Congress has regulated changes inside bankruptcy law in recent years, bankruptcy protections remain a viable option for most people.
If your debts have grown to the point of crippling your finances, it is recommended to consult a chapter 13 bankruptcy lawyer who can explain the process, in detail, and help you determine which option is most convenient. Under chapter 13 bankruptcy, also known as “earned wages,” you file a court payment plan that is overseen by a trustee. This plan consolidates all debts to a single reasonable monthly payment.
Things to Understand
After the person consistently pays their monthly payment for a period of three to five years, all their remaining eligible debts can be discarded. Chapter 13 bankruptcy is ideal for individuals who are behind on their mortgage and/or car payments and who want to protect their home. It is also for those who have a good paying job, but who are overwhelmed by their present debts.
A reputable chapter 13 bankruptcy lawyer can make a huge difference when filing for bankruptcy.