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Advantages of Chapter 13

Bankruptcy is a powerful tool that many individuals can use to relieve themselves of debt and get their financial lives back on track. While bankruptcy comes with some penalties, Chapter 13 bankruptcy offers those with dependable income the opportunity to take control of their debt without forfeiting much or any of their property.

In very general terms, Chapter 13 allows debtors to repay their debts according to a structured repayment plan that a court approves. Under this plan, the debtor receives immediate relief from collections and continues to enjoy this protection until the repayment plan finishes and the discharge is complete.

In some ways, a Chapter 13 repayment is very similar to a debt consolidation loan. Under Chapter 13, the debtor makes regular, predetermined payments to a trustee who then directs portions of that payment to various creditors. At the end of the repayment plan's term, all the debt addressed in the bankruptcy is either repaid in full, or the debtor receives a partial discharge of some of the debt. Most repayment plans last between three and five years, so be sure you know exactly what you're getting into before you pursue Chapter 13.

If you believe that you may be a good candidate for Chapter 13, you must make sure that you have proper guidance. These matters are very complicated, and attempting to navigate them on your own could lead to disaster. A bankruptcy lawyer can help you examine the details of your needs and see if Chapter 13 is a strong way for you to reclaim your financial freedom.

Source: United States Courts, "Chapter 13 - Bankruptcy Basics," accessed Sep. 08, 2017

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