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What should you know about Chapter 13 Bankruptcy?

| Mar 1, 2021 | Firm News

Chapter 13 Bankruptcy is a filing option for those who wish to retain assets through the process. This is the proper option for those with homes, heirlooms and other assets and property that they would not wish to lose in bankruptcy. Additionally, if you file for bankruptcy and your income is too high for Chapter 7 bankruptcy, you may pursue this option.

Why can I keep assets in Chapter 13 rather than Chapter 7?

Chapter 13 is informally known as a “reorganization” bankruptcy. With reorganization, the court creates a repayment plan for you that will last between three and five years, depending on your income.

Chapter 7 Bankruptcy, however, is a “liquidation bankruptcy.” To resolve the debts, all the assets of the filing individual – with some exceptions – are sold, and those funds are used to pay off the claimants.

When the five years are up, what happens?

Once you’ve completed the term of your repayment plan bankruptcy discharges much of your deb,ts. However, there are some debts that bankruptcy cannot discharge. For a Chapter 13 Bankruptcy, the non-dischargeable debts are:

  • Student loan debt
  • Child support
  • Criminal penalties

Additionally, any debts not included in your repayment plan are not dischargeable.

What happens when I file for Chapter 13 Bankruptcy?

Any time anyone files for bankruptcy, the court issues a stay halting all debt collection efforts against you. It is immediate relief and allows you to begin the next part of the process.

There is much more to understand about Chapter 13

Bankruptcy code is especially complex, and it is natural to have many anxieties and questions. If you choose to pursue bankruptcy, it will serve you to consider all of the available options to find one that truly meets your needs.