Chapter 13 bankruptcy offers a way out of debt that allows you to make good on what you owe while still benefiting from bankruptcy protection. It is an entirely different process than Chapter 7 bankruptcy, so there is often confusion about what Chapter 13 can and cannot do. To help clear up any misconceptions, below are answers to some of the more frequently asked questions about Chapter 13 bankruptcy.

FAQ About Chapter 13 Bankruptcy & the Benefits It Provides

How Do Chapter 13 & Chapter 7 Differ?

Chapter 7 eliminates most unsecured debts, meaning the debtor does not have to repay them. Chapter 13, on the other hand, is more of a repayment plan, like debt consolidation. The Chapter 13 filer works with their attorney to come up with a long-term payment structure that is more conducive to their income and budget.

How Long Does a Chapter 13 Plan Last?

Most Chapter 13 filers are given three to five years to repay what they owe. The exact length of time will be determined by your state's guidelines for Chapter 13 bankruptcy filings. In rare cases, bankruptcy courts may approve a payment period longer than five years.

What Are the Benefits of Filing Chapter 13 Over Chapter 7?

For the right filer, Chapter 13 has several distinct advantages over Chapter 7. If your home is in foreclosure, Chapter 13 may be the best way to hang onto it as it allows you to make good on what is owed while still keeping up on monthly mortgage payments. Also, certain secured debts can be put into the repayment plan, which can reduce the monthly dollar amount of those debts. Another major advantage is that money repaid by the plan is handled by a trustee, meaning the filer does not have to manage a multitude of regular accounts or deal directly with any creditors.

What Are the First Steps to File for Chapter 13?

First, find out if you are eligible. Those with unsecured debts less than $394,725 and secured debts less than $1,184,200 will qualify. Next, satisfactorily complete a credit counseling course; your attorney can help you find an approved course that will meet the court's terms and allow the next steps in the process to commence.

If you're considering Chapter 13 bankruptcy, trust Brian R. Cahn & Associates, LLC, to protect your rights and advocate for your financial future. Since 1991, this Cartersville, Georgia-based legal team has been representing clients throughout the northwestern part of the state. Call (770) 382-8900, visit them online, or contact them on Facebook to schedule a consultation.