When most people think of bankruptcy, they start worrying about giving up all of their property. They think that men with moving trucks are going to come to their homes, cart away all their stuff and leave them penniless and possession-less…
This idea couldn’t be further from the truth. Even with Chapter 7 (liquidation), you’ll be able to keep a great deal of your property. And, with Chapter 13, you won’t have to sell anything at all.
Why don’t I liquidate my property in Chapter 13 bankruptcy?
Chapter 13 bankruptcy is commonly referred to as “reorganization” bankruptcy. That’s because you’re not going to sell or liquidate anything to pay off debt. You’re going to meet with your creditors, get all of your debts in one place and create a repayment plan. This repayment plan must be approved by the court. Before that, the creditors will have the opportunity to speak up and advocate for their right to receive payment for their debts. However, after the court approves the “repayment plan,” it will be legally binding.
Then, for the next three to five years, you’ll be paying a monthly payment to the bankruptcy court, which will distribute the payment to the creditors covered under the bankruptcy. Once you’ve satisfied all of your payment obligations, any debt that remains under the bankruptcy will be dissolved.
What’s the best thing about Chapter 13?
Aside from not needing to sell off your assets, the best thing about Chapter 13 is the fact that the bankruptcy court will never approve a “payback” plan that you can’t afford. The court will analyze your income and determine a monthly payment that you can reasonably handle within your existing budget.
Chapter 13 is an excellent way to get your life back on track if you have a reliable income and you’re swimming in debts that you’re barely able to pay each month. You can go from “drowning in bills” to “financially stable” in very little time.
Are you ready to file for bankruptcy?
Do you want to file for Chapter 13 bankruptcy or learn about other forms of bankruptcy? It’s worth your time to continue studying and learning about the topics. The knowledge will help you understand if bankruptcy is a good choice for you.