No matter how responsible you are, a job loss, medical emergency, or other unforeseen disaster can quickly wreak havoc on your finances. If temporary financial hardship has forced you to fall behind on a mortgage, auto loan, or other secured debt, Chapter 13 provides a path to solvency. Understanding how bankruptcy law protects your rights will help you manage debt without surrendering your assets.

A Guide to Chapter 13 Bankruptcy Law

No Liquidation

One of the most attractive benefits of Chapter 13 bankruptcy vs. Chapter 7 is the opportunity to get finances under control without surrendering your personal property. Because you’re making a good-faith effort to repay secured debts, you aren’t required to sell off all your property to appease creditors. The trustee won’t seize savings accounts, retirement, or other assets, and creditors can’t take collections actions while your payments are current.

Manageable Repayment of Secured Debts

A Chapter 13 bankruptcy allows borrowers to resolve secured debts like mortgages and auto loans through a court-managed payment plan. During the course of the plan, which typically covers three to five years, lenders can’t pursue foreclosure, repossession, or any other collections. However, borrowers in Chapter 13 usually must devote all disposable income towards bankruptcy payments.

Discharged Unsecured Debt

As with Chapter 7, Chapter 13 bankruptcy law allows borrowers to completely discharge most unsecured debts, including some back taxes, credit cards, and unpaid medical bills. However, these creditors must receive at least as much as they would have if you had filed for Chapter 7 and liquidated your assets.

With over 20 years of experience and a strong background in bankruptcy law, Gilbert P. Kaback, Attorney at Law has the expertise to help you find debt relief. If you’re struggling to keep up with debts, their team in Colchester, CT, will help you get a fresh start on your financial life. Visit their website for more on their bankruptcy law services, or call (860) 537-0874 to schedule a consultation today.