Chapter 13 bankruptcy, also known as the wage earner's plan, allows for individuals to file for bankruptcy when they are either not eligible for Chapter 7 or if they are simply better suited for this chapter. This chapter is also commonly known as financial reorganization and is considered by many to simply be a type of debt consolidation.
In contrast to filing for Chapter 7, which is known as "straight bankruptcy" or liquidation, this type of bankruptcy does not force the debtor to liquidate all of their assets. Instead, a court-approved plan is established that allows for the debtor to repay their creditors over a three to five year period. In many scenarios, the debt is reduced and the payment plan is far more affordable than previous to filing.
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Many people favor Chapter 7 simply because it is an immediate relief from debts - after filing, the debts are immediately discharged. Does this, however, mean that this is the best form of bankruptcy? Absolutely not! There are actually many advantages that can be obtained when filing for a Chapter 13 as opposed to a Chapter 7.
For many people, those who have a sincere desire to repay their creditors, Chapter 13 allows them the court's protection so that they can go forth and do so. There are many debtors who do not want to wipe out their debt - they simply want the tools to be able to get caught up. This type of plan gives them the chance to do just that. Another notable advantage is that if you have fallen behind on your payments (for example, on your car payments), you will be able to get caught up and then simply reinstate the original agreement between you and the creditor.
Exemption is another area that causes many people to lean towards Chapter 13 should they be deemed eligible. While there are many areas of property that are considered to be exempt from bankruptcy and liquidation, there are also many that are not exempt. What happens if you have valuable pieces of property that would not be exempt from the bankruptcy? By filing for Chapter 13, you will be able to protect your assets - all of it.
Another protection that is a special provision to Chapter 13 bankruptcy is that it may protect co-signers. By protecting third parties who have become liable on the consumer debts, you will be able to protect any other people who are involved in your debt.
If you are currently considering filing for bankruptcy, it is highly likely that you will be confused and overwhelmed by the situation that you are currently dealing with. There is nothing simple about dealing with bankruptcy - but that does not need to mean that you have to be left without any sort of assistance. By working with an experienced bankruptcy lawyer, you will be able to take the necessary steps towards looking for fiscal stability once more.
By helping you to work through the complex process of filing for bankruptcy, they will be able to protect your best interests and allow you to move forward as smoothly into the next chapter of your life. If you are currently struggling with debt, it is highly important that you don't waste a minute - call a local attorney as soon as possible to learn more about your case and how they will be able to help you.
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