Even though you are making your regular payments, your debts aren't going down. If you have regular income, chapter 13 bankruptcy can help you restructure your debts so that you can actually pay them off, instead of watching the balances climb each month. Take a few minutes to learn some of the important details about filing for chapter 13 bankruptcy.
1. The Bankruptcy Takes Years to Complete
The exact term of your chapter 13 bankruptcy varies based on how much you owe to creditors and how much income you have. Most chapter 13 plans take between three and five years to complete. During this time, you make your court ordered payment to a trustee. The trustee then distributes this payment to your creditors.
2. Chapter 13 Bankruptcy Can Help You Keep Your Home
If you are behind on your mortgage payments, a chapter 13 bankruptcy can help you save your home from foreclosure. The amount you are behind in your mortgage becomes an obligation during your bankruptcy proceedings. As long as the mortgage company agrees with the plan, you may be able to pay the amount back during the bankruptcy process.
It is important to note that chapter 13 bankruptcy does not change your mortgage payments in the future. Before making the decision to keep your home, examine your budget to make sure you can afford your monthly mortgage payments. If you can't, it may be advisable to sell your home so you can obtain housing that is more affordable.
3. You Car Can Also Be Saved
Chapter 13 helps debtors keep their vehicles by allowing them to repay any payments that have been missed. The missed payments are included in the chapter 13 plan. Like mortgage payments, you are expected to pay your car payments during and after the chapter 13 plan.
Again, make sure your car is affordable. If it isn't , you need to consider selling the vehicle for something that is more budget friendly.
4. You Can Keep Your Personal Belongings
One way that a chapter 7 bankruptcy differs from a chapter 13 bankruptcy is that the chapter 7 bankruptcy requires you to sell nonexempt possessions to pay back creditors, while the chapter 13 bankruptcy allows you to keep your belongings.
It is important to note that the value of your assets is taken into account when the court is deciding how much of your debt you have to pay back.
If you want to pay off your debts, but struggle to make the payments, a chapter 13 bankruptcy plan may be right for you. This plan lets you reduce the amount of your debts so that you can pay them back over a reasonable time period.