Many people suffering from unmanageable debt find relief in the bankruptcy process. While it is not for everyone, nor is it available to everyone, bankruptcy is a powerful tool in the right situation.
Beyond determining whether bankruptcy is the correct choice, there is another important decision to make. Applicants must decide under which sections of the United States Bankruptcy Code they wish to file.
Chapter 13 bankruptcy in context
One of these sections is Chapter 13. As explained by the FTC, this type of bankruptcy involves a repayment plan is that allows debtors to fulfill their obligations over the long term.
In contrast to a straight bankruptcy — one that someone files under Chapter 7, that is — Chapter 13 has some additional requirements. Most notably, applicants need to have enough income to be able to maintain the terms of their repayment plans.
Potential benefits of Chapter 13
The question then becomes why someone would want to apply for a more limiting type of bankruptcy if there is a simpler one available. As per FindLaw, the answer is that there are several potential benefits of Chapter 13.
In contrast to unmanaged debt, which could easily result in what amounts to a lifetime of financial servitude, Chapter 13 provides a solid deadline for the end of the repayment period: no longer than five years. Additionally, it often allows bankruptcy filer’s to maintain ownership of most of their personal property, if not all.
There are many other potential benefits of Chapter 13 that the FindLaw article mentions. However, these are often more or less important depending on the circumstances of the person filing. So, one must usually not only choose to file bankruptcy and choose the right type of bankruptcy, but also you strategy to decide how to take the greatest advantage of the protections available under any given chapter.
We are a debt relief agency. We help people file under the U.S. Bankruptcy Code.