In today’s economy, many hardworking Floridians find themselves struggling with debt. After all, life is expensive and unexpected costs happen. When debt becomes unmanageable, bankruptcy can offer a critical lifeline to financial stability.
An individual may consider filing either Chapter 7 or Chapter 13 bankruptcy. Because of the eligibility requirements of the two types of bankruptcy, Chapter 13 is typically the most viable option for people who have a steady income.
Chapter 13 bankruptcy
For those with a stable income and assets, a Chapter 13 bankruptcy offers an opportunity to reorganize and repay debts while preserving ownership of valuable assets, such as a home and car.
In a typical Chapter 13 bankruptcy, the flier will enter into a reorganization plan in which they make monthly payments to a court-appointed trustee for 3-5 years. The trustee then distributes payments to the filer’s creditors.
At the conclusion of the 3-5 year period, the bankruptcy court can generally discharge remaining unsecured debts, including qualifying credit card debt and medical bills.
Advantages of Chapter 13
A primary benefit of Chapter 13 bankruptcy is the ability to reorganize debt into a manageable payment plan while preserving ownership of valuable assets such as a residence or car.
While secured debts like mortgages and auto loans are not eligible for discharge under Chapter 13, the reorganization plan can allow fliers to catch up on payments or extend payment terms so that the filer can maintain ownership of the asset.
Ultimately, decisions about filing bankruptcy involve a multitude of complex factors. An experienced bankruptcy attorney can provide an important perspective on whether bankruptcy is the right option and, if so, whether Chapter 13 is the right choice.