Job loss, a serious illness, divorce or another difficult life situation can force you to take out large amounts of debt. If you feel like there is no way out from the debt you accumulated, you may consider filing Chapter 13 bankruptcy.
According to the U.S. Courts, Chapter 13 bankruptcy provides you with the opportunity to repay the total or a partial amount of your debts. The court will set you up with a plan that lasts three to five years and at the conclusion of this time period, you will not have to make any additional payments on your debts.
The benefits of filing Chapter 13 bankruptcy
One of the main advantages of Chapter 13 bankruptcy, when compared with Chapter 7 bankruptcy, is that you can prevent foreclosure on your home. However, you must continue to make payments on your mortgage during the bankruptcy process. Filing Chapter 13 bankruptcy can also help you protect your other assets that may be subject to repossession.
Qualifications for this type of bankruptcy
As long as the total sum of your secured and unsecured debts is less than $2,750,000, you can file Chapter 13 bankruptcy. However, you cannot file Chapter 13 bankruptcy if, during the last 180 days, you filed a bankruptcy petition and you did not appear before the court.
You should approach the decision to file Chapter 13 bankruptcy carefully. Although this type of bankruptcy can be a helpful way to restructure your debts and alleviate some of your financial stress, there are still consequences that come from filing Chapter 13 bankruptcy.