Contrary to popular misconceptions, considering bankruptcy is not a personal failure, nor is it an attempt to avoid one's responsibility. Illinois residents might have accrued overwhelming debt for a variety of reasons and see no way out of their predicament. Fortunately, filing for bankruptcy is a viable alternative that is perfectly legal and has helped an endless array of people get on better financial footing and move forward with their lives. A prior post discussed who can file for Chapter 13 bankruptcy. This post will center on Chapter 13's advantages.
Chapter 13 lets those who have a consistent income file and pay back their debts over time. It is often viewed as preferable to other forms of bankruptcy, such as Chapter 7, because it lets them salvage a home from being foreclosed upon. When filing for Chapter 13, the foreclosure proceeding can stop and, as time passes, delinquent mortgage payments can be rectified. Regardless, it is still required to make the mortgage payments as they come due and they must be paid on time.
Secured debts - otherwise known as debts that have collateral - can be rescheduled and extended over the life of the Chapter 13. Separate from that is the mortgage for a primary residence. By taking this step, the payments might be lowered. There is a special provision in Chapter 13 that protects those who might be liable for the debtor's consumer debts. If, for example, there is a co-signer for a loan, they will not be held responsible for the debt during a Chapter 13.
In short, Chapter 13 is akin to a consolidation loan with the individual making the payments to the Chapter 13 trustee. In turn, the trustee will distribute the payments to the creditors. During the Chapter 13, the debtor will not have any contact with the creditors. Unexpected life changes and financial challenges can hit suddenly or accumulate over time. Chapter 13 is an option. To have a full understanding of Chapter 13, a debtor should contact an attorney who is experienced in debt relief to garner information and get assistance in filing a case.
Source: uscourts.gov, "Chapter 13 -- Bankruptcy Basics -- Background, Advantages of Chapter 13," accessed on May 9, 2017