When Chapter 13 is Better

One of the best forms of bankruptcy for some individuals is Chapter 13. If you are fraught to make ends meet and you cannot get out from under your debt burden, it may be wise to turn to an attorney and to take steps to file bankruptcy. Doing so will cost you. It will blacken your credit report for some time. It can also cause a number of difficulties in getting jobs, in getting insurance and even in managing your loan needs in the future. However, there are a few things that are very important to remember. In some cases, filing other forms of bankruptcy just does not work.

What Is It?

Chapter 13 is a type of bankruptcy in which your assets are protected because you will pay back much of your borrowed funds over a period of time. During the three to five year plan, you will make payments to a trustee who will then pay your creditors. Some types of loans, such as car loans and tax debt will be paid off in full during that time. In most cases, credit card debt is paid back minimally, often as little as just one percent. However, what makes this particular form so important is that unlike total liquidation bankruptcy, in this form you get to keep your assets rather than liquidating them to pay back your creditors.

Who Needs It?

There are many people who will benefit from filing Chapter 13 bankruptcy rather than filing other forms. If you are a married or individuals who owns a significant amount of assets, including homes, vehicles or other valuable assets, this form can be an ideal choice since there is no loss of those assets. In addition, those who are facing financial suffering but who are unable to file 7 because of the income limitations can benefit from this form. In some cases, individuals prefer this form because it allows them to get out from under debt while still paying it.

In short, Chapter 13 is a method of reorganization of debt. If you are in foreclosure, it can help to encourage lenders to rework your mortgage, but you still have to get caught up on payments to avoid the foreclosure. It can help you to keep your car and help you to avoid judgments against you. It can also help you to stop creditors from calling you since they will be unable to do so.

All of these things add up. In Chapter 13, you do get back on track. You do get the fresh financial start you need if you are struggling under a large amount of debt. However, what is most important to know is that you can protect your home and vehicles or other assets from loss through the bankruptcy process by using this form instead of others. You do have to work towards repaying much of your debt but for many people, this is an important solution.