It can be a devastating blow to realize that you just do not make enough money to pay all your bills on time monthly. This could be due to a loss or change of job or debt that keeps climbing a little at a time and gets out of hand before you catch it. Regardless of the reason, it can cause a huge change in your life. You may become more sullen or even mean because of all the stress and worry. You did not take on any of the debt with the intention of not paying it, but things happen. This is when bankruptcy comes into play. While you may not qualify for a complete wiping of the debt, as in a Chapter 7, it is easier to file and receive a Chapter 13. Here are a few things to consider.
Basically, a Chapter 13 is a reorganization of your debt. The court and your trustee will consider all your debt, all your income, your living expenses, and arrange for a payment plan that will go towards paying off the debt. The creditors will be considered individually and the court will determine how much of what you owe will be paid. The payment plan generally is set for a period of five years. At the end of the repayment period, any remaining debt will be discharged.
No Need to Sell Your Belongings
While a Chapter 7 will wipe your debt, you are probably going to have to give up some of your belongings to the bankruptcy trustee. This person will sell the items and use the proceeds to pay down your debt. The remaining debt is then discharged. A Chapter 13 does not require this. You will be able to keep everything because you will be making payments in lieu of selling things to reduce the debt.
Restructure Your Mortgage
If you have gotten behind in your mortgage payments, a Chapter 13 will allow you to use the repayment period as time to get caught back up. You will be able to apply for a loan modification to make your monthly payments easier for the remainder of the loan too. Filing bankruptcy will put a hold on any foreclosure action taken against you so you have more time to figure out how to save your home or sell it and start over somewhere new.
There are many ways a Chapter 13 bankruptcy can help get yo back on the road to financial stability. Contact a bankruptcy attorney as soon as things get out of hand and avoid going through all the stress.