Dealing with financial issues can be overwhelming and emotional. Although many people hold a negative perception of personal bankruptcy, it can actually provide a significant amount of debt relief to those who successfully pursue it. It is important for those facing overwhelming debt to consider the different bankruptcy options available to them before going this route, though. We hope that this post will provide a little more insight into Chapter 13 bankruptcy, which is often referred to as the wage-earner's plan.
Under Chapter 13 bankruptcies, debtors enter into a repayment plan that lasts anywhere from three to five years. This plan is tailored to the individual's income, which is meant to make monthly payments more manageable. If the debtor makes all of his or her payments over the course of the payment plan, then any remaining debt may be written off.
Chapter 13 bankruptcy has other benefits, too. Perhaps the biggest is that it initiates a stay on foreclosing procedures, thereby allowing a debtor to make up mortgage payments and protect his or her home. Also, since payments are made to a trustee who then distributes payments to creditors, a debtor does not have to have direct contact with creditors. This means that creditor harassment is halted.
Filing for bankruptcy can be a great way to secure a fresh financial start. However, it isn't for everyone. Certain requirements must be met, and each type of bankruptcy has its advantages and disadvantages. Therefore, those who are thinking about pursuing bankruptcy should carefully consider whether it would be beneficial to discuss the matter with a legal professional who has handled a significant number of these types of cases.