3 Elements of Chapter 13 Bankruptcy

General Article

Debt can cause any person to feel down. Even those considered high-income earners can find themselves in a bottomless pit of debt due to poor planning or handling of money. Perhaps a life event, such as a job loss, divorce or long-term injury caused these missteps. Regardless of the cause, the collection letters and calls continue to mount, placing more stress on you with each one. Considering bankruptcy as the solution may benefit in the short and long run. Look at three of the benefits Chapter 13 offers.

1. Reorganization of Debt

Chapter 13 bankruptcy is often confused with Chapter 7. While both disburse the debt, they both function in two very different ways. In Chapter 13, your debts are placed in order of priority. Secured debt, or those with collateral, get payment priority. Credit cards are considered last. A trustee helps negotiate a repayment plan with the creditors that is manageable. Thus, you wind up paying some or all of the debt over three to five year period. When deciding what type of bankruptcy filing works best, you may want to ask a chapter 13 lawyer orlando fl for guidance.

2. Home and Vehicles

Under Florida bankruptcy laws, some of your assets may be retained in Chapter 13 bankruptcy. If you are current on your mortgage or car payment, these are usually continued at the regular payment amount and frequency. If they need modifying, that can be done during the process as well. Since items are not liquidated, as in Chapter 7, it is likely you can keep the property in your name.

3. It May Fall Off Credit Report sooner

Bankruptcy will affect your credit for years. In Chapter 13, the mark will fall off in seven years from the discharge date, or the date your payment plan is finished. Since some of the debt was paid, it does not have the impact that a discharge of all debts may have.

Chapter 13 may be worth considering if you can handle making payments regularly.