Bankruptcy is a daunting term that can evoke feelings of embarrassment and shame for those who don't fully understand it. However, filing for bankruptcy can be a smart financial decision for those who are struggling with overwhelming debt. Chapter 13 bankruptcy is a powerful legal tool that allows individuals to restructure their debt repayment plan with creditors in order to regain control of their finances. In this blog post, we will explore how Chapter 13 bankruptcy works, how it differs from Chapter 7 bankruptcy, and the benefits of filing for Chapter 13 bankruptcy.

What is Chapter 13 Bankruptcy and How Does It Work?

Chapter 13 bankruptcy is also known as the "wage earner's" bankruptcy. This type of bankruptcy is designed for individuals who have a regular income. The goal of Chapter 13 bankruptcy is to give filers the opportunity to restructure their debts and create a manageable repayment plan. Unlike Chapter 7 bankruptcy, which is a liquidation of assets, Chapter 13 bankruptcy allows filers to keep their property and assets. During this process, a debtor proposes a repayment plan to creditors which usually lasts three to five years. The debtor must make monthly payments to the bankruptcy trustee, who will distribute the payments to creditors according to the plan. Once the debtor completes the payment plan, any remaining debts are typically discharged.

How is Chapter 13 Bankruptcy Different from Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy, where a debtor's assets are sold by the bankruptcy trustee in order to pay off creditors. Under Chapter 7, most of the debtor's debts can be discharged without any repayment. Chapter 13 bankruptcy is different because the debtor can keep their assets and does not have to sell any property. Instead, the debtor proposes a debt repayment plan to the bankruptcy court and creditors. In this case, creditors will receive a portion of the debt owed over the life of the repayment plan.

Benefits of Filing for Chapter 13 Bankruptcy

One of the primary benefits of filing for Chapter 13 bankruptcy is that it can stop foreclosure proceedings, giving the debtor time to catch up on mortgage payments and potentially save their home. Additionally, filers are typically allowed to keep their assets and property, as long as they make the required payments. Chapter 13 bankruptcy also allows filers to restructure their debts in a way that is more manageable and can prevent further financial problems down the road.

Benjamin Legal Services Can Assist 

Bankruptcy can be complex, and it's important to have a competent and compassionate legal team by your side. Benjamin Legal Services offers an experienced team who can guide you through each step of the bankruptcy process. From determining if Chapter 13 bankruptcy is the right option for you to crafting a repayment plan and representing you in court, we can help our clients regain control of their financial future.

Chapter 13 bankruptcy could be the solution to your debt problems. This legal tool can give you the chance to reorganize your finances and create a more manageable repayment plan. Working with an experienced bankruptcy team like Benjamin Legal Services can make the process less stressful and more successful. Don't let fear and embarrassment keep you from taking control of your finances - contact us today to discuss your situation!