Hopefully you have read our prior blog titled “How Filing Chapter 7 can Improve your Financial Life” to learn the benefits of Chapter 7 cases. This blog will discuss the Chapter 13 process and how a plan of reorganization can benefit you.
When you file for bankruptcy protection under Chapter 13, you must have a routine source of income to fund your plan of repayment. Your Chapter 13 plan will outline how you intend to repay your creditors all or a percentage (0-100%) of what is owed to them. The law requires your Chapter 13 plan to last a minimum of three years and a maximum of five years. Finally, you will be required to make monthly payments to the Chapter 13 trustee who will distribute the payments to your creditors as set forth in the plan.
Drafting a Chapter 13 plan can be confusing, so it is wise to seek the assistance of an experienced bankruptcy attorney. Each type of debt you owe falls within one of three primary classifications, which are:
Chapter 13 bankruptcy is not an indicator of failure. In fact, it is actually a method by which you can lay the foundation for a better, brighter financial future for you and your family.