The main purpose of a Chapter 13 bankruptcy is to consolidate debt and stop foreclosure or repossession. Even though a Chapter 13 plan extends payments over a longer period of time, a creditor cannot legally pursue collections on any account that is included in an active bankruptcy. These plans are intended to include past due payment amounts along with ongoing payments, thereby allowing a debtor additional time to bring an account back to current status.
The prospect of losing a family home is understandingly alarming and upsetting. As a result, it is important for those struggling with financial challenges to be aware of the personal bankruptcy options available to protect them. Personal bankruptcy options may be able to help protect a family home and may also help with foreclosure. The Chapter 13 bankruptcy process may help stop foreclosure which is why it is an option that is important to understand.
There are a few distinctions between Chapter 13 bankruptcy and Chapter 7 bankruptcy that should be taken under consideration when you are deciding if either are right for you. Chapter 7 bankruptcy is considered liquidation bankruptcy, while Chapter 13 bankruptcy is "reorganization" bankruptcy. This distinction generally means that with Chapter 7 bankruptcy, one must turn over non-exempt property that you own. For Chapter 13 bankruptcy, you are setting a repayment plan based on your earnings, and you get to keep the property that you own. There are a few qualifying factors that you must fall within in order to qualify for Chapter 13 bankruptcy, however.
One of the potential advantages that Chapter 13 bankruptcy has over Chapter 7 bankruptcy is that it does not require the debtor to sell off or liquidate all of his assets in order to satisfy his creditors and complete his bankruptcy discharge. Rather, a Pennsylvania debtor who chooses to use Chapter 13 bankruptcy to find a fresh financial start may set up a repayment plan that provides his secured and unsecured creditors with payments toward the money they are owed. This post will generally discuss the Chapter 13 repayment plan; readers who would like to learn how they may benefit from Chapter 13 bankruptcy and its various protections are encouraged to speak with their own attorneys. This post is not intended to serve as legal advice.
It is not unusual for Pennsylvania residents to experience financial problems to the point that they have to consider filing for one form of bankruptcy or another. Understanding which chapter suits their needs is key. Knowing the benefits of one over another can help to make an informed decision. With Chapter 13 bankruptcy, there are certain benefits that it has over other options. For those who are seeking a fresh financial start, filing for Chapter 13 is a strategy to get it.
Last time, we began looking at the basic difference between Chapter 7 and Chapter 13 bankruptcy, noting that the difference lies in the approach to paying off creditors. We also mentioned that the eligibility requirements for Chapter 7 and Chapter 13 bankruptcy are different, but somewhat complementary.