In the United States, Chapter 13 Bankruptcy is found within the Bankruptcy Code, and it provides guidance on how cases of bankruptcy should be handled. Under this code, the individual is able to retain all their property, as opposed to Chapter 7, in which property is liquidated. These different approaches result from the two chapters having different goals. While Chapter 7 is aimed at immediately relieving you of your debt, the aim of Chapter 13 is to consolidate your debt, making it more manageable and easy to pay.
How Chapter 13 Bankruptcy Works
Under Chapter 13, the individual goes to a bankruptcy lawyer, whose main aim is to help their client to calculate a repayment plan that the individual can manage. It is, therefore, important for you and your lawyer to work with exact figures, both concerning your full debt as well as your gross and net income. With the repayment plan being supervised by the court, it is essential that the plan is favorable and workable for you. This way, the agreement reached is best suited to your circumstances without over-extending your finances. This is important because you would still be expected to fully repay your debt, except for unsecured debt for which you may be allowed to pay a percentage.
The good news is that you will have between three and five years to pay off your debt, which in turn makes it a relatively flexible option. One of the main advantages of Chapter 13 bankruptcy is that it effectively puts a stop to any foreclosures that may be pending on your home. Filing under this code, therefore, helps to save your home and enables you to continue paying it off. This is also the case in situations where items are in danger of being repossessed. However, this only works as long as you keep up with your payments.
Iowa Bankruptcy Law Firm not only provides guidance on both Chapter 7 and Chapter 13 bankruptcy, they also offer free consultations on bankruptcy with the aim of getting a better handle on your situation and what options are available to you.