When you file for Chapter 13 bankruptcy, it gives you the ability to pay your existing debt off in a period of three to five years. When this type of bankruptcy is filed, the court will issue what is called an “automatic stay” to your creditors, just like they do in the Chapter 7 filings. However, when you file for Chapter 13 bankruptcy, you will typically be able to retain ownership of their property rather than having to liquidate your assets. They will also propose a plan that outlines how they will repay all, or some, of their debt over time.
During this period of time, the debtor will have to make regular payments to the appointed trustee who will then distribute it to the creditors that are owed.
It is important to understand that, in order to be eligible to file for a Chapter 13 bankruptcy, you have to have a stable source of income with a line of disposable income and also meet specific debt limitations regarding your secured and unsecured debts.
If you have considered filing bankruptcy, there are some advantages offered when you decide to file for a Chapter 13. One advantage would be if you have more equity in your home, then it can be protected when you opt for the real estate exemption. This means you would be able to keep your home.
If a co-signer is involved in the debt situation, then the Chapter 13 will be able to protect this person who did not file to receive bankruptcy protection. There are certain people who will be required to file for a Chapter 13 case, even when they do not have large amounts of equity in their home. In order to see what option is best for you, you should consult with a bankruptcy attorney who can conduct a means test.
A general rule is that most individuals who file for bankruptcy find it much more difficult to acquire long-term credit, including a mortgage, after the bankruptcy has been filed.
The fact is that Chapter 13 bankruptcy offers many more options than Chapter 7, including the ability to maintain possession of your assets; however, this is a decision you should make after discussing your options with your attorney. It is important to do what is best for your long-term financial health.
If you are considering filing bankruptcy, be sure to consult with a reputable attorney at RKE Law Group. They can answer any questions you have and ensure you receive the legal representation needed.