Chapter 13 Bankruptcy Can Provide Relief From Crushing Debt

In today’s society consumers are taking on more debt than ever. In many instances, the debt becomes too much and they can no longer pay their monthly payments. In situations like this, it may be necessary to file bankruptcy.

It is important to note that bankruptcy will not wipe out all of your debt. Therefore, it is important that you have a full understanding of how bankruptcy works before filing. Chapter 13 bankruptcy was put in place to help consumers pay off their debt in approximately three to five years. While working with a bankruptcy court, creditors are only able to collect money through the courts.

Chapter 13 bankruptcy allows consumers to keep their personal assets and property. However, the creditors will not receive the full amount they are owed. Instead, they are able to obtain a portion of the debt, which is more than they would be able to collect, should the consumer default on their debt.

It is important to note that not all creditors will agree to the terms set up by the credit counselor. They have a period of 45 days to either reject or accept the terms. If the creditors feel they will not gain enough from the terms, they have an additional 90 days to file a claim with the bankruptcy court.

Someone who is looking to file Chapter 13 bankruptcy should take into consideration their future financial needs. Chapter 13 bankruptcy will remain on a person’s credit for 10 years. Therefore, if they need to obtain any type of credit in that 10 year period, they must first receive permission from a Chapter 13 trustee. Often times, this will hamper efforts to obtain new credit.

Generally speaking, people have the best intentions of paying off their debt. Before they know it, the credit cards are maxed out and they can no longer pay their monthly payments. In situations such as this, bankruptcy can help to eliminate their debt.

In order to file for Chapter 13 bankruptcy, you must still have a source of income. Therefore, if you have lost your job or source of monthly income, then Chapter 13 bankruptcy is not the route you should go. Chapter 13 bankruptcy is ideal for people and small business that need additional time to repay the debt. When filing Chapter 13, you are able to retain your personal property.

When looking to file Chapter 13, you must meet certain guidelines. For instance, any person with unsecured debt, such as credit cards, must be less then $307,675. Likewise, secured debt, such as a mortgage, must be less than $922,975. Debt such as criminal fines, child support and alimony, court ordered restitution and student loans may not be included in Chapter 13 bankruptcy.

No one likes to think they may have to file bankruptcy. However, there are some situations in which bankruptcy can help people continue to live a normal life. Chapter 13 bankruptcy will not eliminate a person’s overall debt. However, it will help them to create a repayment plan that can be extended over a number of years. So in some situations, Chapter 13 bankruptcy may be the perfect solution to an otherwise less than perfect situation.

Learn how to file Chapter 13 bankruptcy as well as other types of debt relief and bankruptcy options at