Different kinds of bankruptcy work better in different situations. Reviewing the differences between the various kinds of bankruptcy can help people choose the best way to file. Many individuals may look to a Chapter 13 bankruptcy to protect their assets and income during the bankruptcy.
One of the differences that set a Chapter 13 filing apart from a Chapter 7 bankruptcy is the repayment plan. The party filing for bankruptcy will have to create and then carry out a repayment plan. The successful completion of the repayment plan can lead to the discharge of the remaining balances of unsecured debts, like credit card balances and medical debts.
When you understand how the repayment plan works, filing a Chapter 13 bankruptcy may not seem quite so intimidating.
You won’t have to make multiple payments anymore
Your repayment plan is under the management of the trustee assigned to your bankruptcy filing by the courts. The trustee reviews your financial records and coordinates a meeting of creditors. At that meeting, they will question you and use the information and input from the creditors present to create a repayment plan. Typically, certain debts will have priority over others.
The party filing for Chapter 13 bankruptcy will make one payment directly to the courts every month. The trustee must distribute that payment to the various creditors affected by the bankruptcy. After several years of payments, typically between three and five, the person who filed may become eligible for a discharge.
Learning more about Chapter 13 bankruptcy can lead to better decisions about your upcoming filing.