If you are struggling with overwhelming debt, you might have considered filing for bankruptcy. While many people equate bankruptcy with liquidation, the truth is that you may file for Chapter 13 bankruptcy and hold on to your property despite your debt load.
Chapter 13 allows you to reorganize your debts and create a manageable repayment plan. Depending on a number of factors, Chapter 13 might be appropriate for your situation.
Your income and expenses
Before filing for Chapter 13 bankruptcy, take a close look at your income and expenses. Determine if you are struggling to keep up with your monthly bills despite having a steady income. Chapter 13 bankruptcy might help you regain control of your finances by restructuring your debts into a more manageable repayment plan based on your income.
Your debt types
Chapter 13 bankruptcy can help you address various types of debts, including credit card debt, medical bills and mortgage arrears. If you have multiple types of debts that are overwhelming, this type of bankruptcy can provide a structured way to manage and repay them over time while discharging other amounts that qualify.
Your ability to repay
The main feature of Chapter 13 is a repayment plan that lasts three to five years. If you have sufficient income to finance a payment plan and are willing to commit to it, Chapter 13 bankruptcy can help you get back on track financially without liquidating your assets.
While Chapter 13 requires adherence to a repayment plan, it is possible to modify it as time goes on. However, only certain events will allow for changes, so consider whether you start from a strong position to repay your creditors from the outset.
Your long-term goals
Think about your long-term financial goals when deciding if Chapter 13 bankruptcy is right for you. This form of bankruptcy should help you achieve financial stability and eventually become debt-free without the need for selling off assets. If you need more immediate action and a quicker resolution, Chapter 7 might be the more appropriate choice.
With a comprehensive look at your finances and other qualifications, you should discover if Chapter 13 bankruptcy is the best way to restore your financial health.
