At some point, most people in America find themselves in serious financial hardship. When the idea of filing bankruptcy arises, many consumers who might benefit from it significantly never learn enough about the process to understand what it can do for them.
This unwillingness to consider bankruptcy as a legitimate opportunity to shed debt may cost a person years of hardship.
Chapter 13 bankruptcy, in particular, is poorly understood, because it typically does not require people who use it to forfeit much of their personal property, if any at all. Unlike Chapter 7, which requires debtors to give up their property, Chapter 13 allows debtors with sufficient income to repay their debt in a structured way, with the approval of a court.
If you qualify for Chapter 13, then you may be able to pay off your debts and even discharge some of it, while keeping your personal property and preventing debt collectors from harassing you.
Chapter 13 repayment plans
Chapter 13 bankruptcy requires a debtor to agree to a structured repayment plan for all of their applicable debts, which a bankruptcy court must approve. Typically, the period of the repayment plan lasts between three and five years.
Debt collectors are legally barred from using collections practices on a debtor who files for Chapter 13, and must cease all collections tactics immediately if they are already pursuing certain debts.
As long as the debtor follows the repayment plan, they may not have to alter many other aspects of their day-to-day living. They typically cannot borrow more money while undergoing the bankruptcy, but otherwise face few restrictions.
Protecting your rights while you rebuild your life
Unfortunately, navigating a bankruptcy is no easy task. Those who do not fully understand the details of the process can create long-lasting problems or even derail an otherwise successful bankruptcy. This will land them in deeper trouble than they were when they filed.
When you decide to move forward with your bankruptcy and create a clean start financially, make sure to use all the legal tools available to keep your rights protected until you complete the process. A strong legal strategy keeps your priorities secure while guiding you through debt repayment, creating a firm foundation on which to rebuild.