Surviving Debt: How Chapter 13 Bankruptcy Can Give You A Fresh Start
Posted on: 30 June 2023
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Are you overwhelmed by mounting debts and struggling to make monthly payments? Sadly, this is an all too common experience. Many people have huge debts that can impact their everyday lives, making it difficult to make ends meet and live comfortably.
For some people, filing for bankruptcy may feel like a taboo or shameful thing to do. However, filing for Chapter 13 Bankruptcy is a great way to gain control over your finances and get a fresh start. This article will discuss the basics of Chapter 13 Bankruptcy and how it can help you survive debt.
The Basics
Chapter 13 bankruptcy is a legal proceeding that can help you reorganize your debts and allow you to repay them with a payment plan you can manage. During this time, you will make payments each month towards your debts, and the court will monitor your progress.
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy allows you to keep your assets while working towards paying your debts off. In doing so, you avoid the liquidation of your assets that often occurs in a Chapter 7 bankruptcy. You can restructure your debt in a way you can afford and ultimately regain control of your finances.
The Payment Plan
When filing for Chapter 13 bankruptcy, you're required to submit a feasible and reasonable payment plan proposal. The payment plan is often based on factors such as your income and expenses and how much debt you owe. This payment plan should be realistic, allowing you to live your life and not be forced to live like a pauper.
The payment plan is then reviewed and approved by the court. Once the payment plan is approved and implemented, it becomes legally binding. This can be a great step towards peace of mind since you don't need to worry about creditors endlessly harassing you –– as long as you stick with the payment plan.
Who Is Eligible?
Chapter 13 bankruptcy is an excellent option for people with a regular income, as it allows them to pay their debts over three to five years — rather than having to pay everything at once. This makes it possible to budget and manage their expenses while paying off debts.
Relying on Chapter 13 bankruptcy to manage and get out of debt does not come without a cost. Filing fees and court costs can accumulate, and you'll still have to make payments toward your debts and attorney fees. However, these fees are often more feasible than paying off all your debts at once.
The benefits of being able to rebuild your credit, regain control of your life, and reduce the stress of being in debt outweigh the burden. Talk to a Chapter 13 bankruptcy attorney to learn more about how bankruptcy can help you survive debt.