When you are overwhelmed in debt, struggling to make ends meet, often times you consider bankruptcy. If you are to that point in your financial crisis, you may be wondering what type of personal bankruptcy will suit you best.
Chapter 13 will be your best option if you have secured creditors that you have been unable to make reasonable terms with. When foreclosure, eviction, or repossession processes have begun, Chapter 13 will be your best choice to stop those actions.
The automatic stay in both Chapter 13 and Chapter 7 bankruptcies stop your creditors from trying to collect on your debt. The stay goes into effect as soon as you file your paperwork and continues until the resolution of your case. This gives you time to make decisions if you want to keep your assets, secured or otherwise or turn them over to the trustee to eliminate the debt.
Chapter 13 also protects your nonexempt assets, which might be sold in a Chapter 7 bankruptcy case. You are allowed to keep all your assets if you want to keep your car and your home, you will have to continue to make those payments.
Some creditors consider a Chapter 13 reorganization bankruptcy to be less damaging to your credit rating than filing a Chapter 7 elimination bankruptcy.
Also, if you received a Chapter 7 discharge within the past eight years, you may not be eligible to receive another one. You will, however, be able to convert it to a Chapter 13 bankruptcy and overtime pay back your creditors.
After paying on a court-approved repayment plan for a specified period of three to five years, any remaining qualifying debt will be discharged.
If you have more questions about Chapter 13 or any other bankruptcy questions, contact a McAllen bankruptcy attorney.