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Chapter 13 may be the right type of bankruptcy for you

Many Miami residents are familiar with Chapter 7 bankruptcy. It is a very common form of bankruptcy that can help many people get out from under their current financial problems. By eliminating unsecured debts through the debt discharge process, Chapter 7 offers people a chance to clear out debts they would otherwise be unable to pay.

But there is another option when you are considering bankruptcy, and it's called Chapter 13 bankruptcy. It may not be as well known as Chapter 7 bankruptcy, but it is still a very common form of personal bankruptcy. Chapter 13 has some unique differences when compared to Chapter 7, so anyone considering this type of bankruptcy should consult with an experienced bankruptcy attorney before proceeding.

Chapter 13 is akin to debt reorganization. In other words, the debts that you owe won't necessarily be eliminated. Instead, you will pay them back under a new payment structure that will last three to five years. You may not pay back the entirety of the debt over this time, but you will be encouraged to pay back as much as possible.

In addition, you have to meet certain income and debt thresholds in order to qualify for Chapter 13 bankruptcy. Chapter 13 is especially helpful is you are trying to protect an asset while going through the bankruptcy process.

No matter what type of bankruptcy you choose, it is a very serious matter. You need to consider all of the factors and implications of bankruptcy before going through with a filing.

Source: Investopedia, "The Other Personal Bankruptcy Option: Chapter 13," Daniel Kurt, Sept. 30, 2014

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