When searching for solutions for managing overwhelming debt you may have come across the bankruptcy process. Most people know very little about bankruptcy, and what they do know is often clouded by misinformation. In order to make an informed debt relief decision, it is important to learn about the Chapter 13 bankruptcy process and its benefits.
What Is Chapter 13?
Chapter 13 bankruptcy is a type of financial reorganization of your debt. Essentially, it takes all of your eligible debts and rolls them into a single payment plan. You make your monthly payment to the assigned Trustee and they pay creditors their portion for you. The Chapter 13 payment plan is based on your disposable income and amount of debt owed. By spacing out the payments over a three to five year period, your payments are more affordable than making payments to multiple creditors directly with interest.
How Can Chapter 13 Help?
The Chapter 13 process is unique in that it can help resolve debts that a Chapter 7 bankruptcy cannot, such as mortgages, car loans, and priority debts. The reason is that these debts carry a high importance for repayment, and they are paid before any other creditor as part of your repayment plan. A Chapter 13 can better protect your home from foreclosure, assets from liquidation, and even resolve debts like some tax debts or student loans.
How To File Chapter 13
The first step in filing for Chapter 13 bankruptcy is to consult with your Houston bankruptcy lawyer. It is important you have reviewed all of your options for debt relief and understand what the expectations are of you during your Chapter 13 plan. You will need to complete a credit counseling course and fill out the filing petition. Be sure to provide all of the financial information with accuracy and honesty in your petition to maximize your chances at a successful debt discharge.