In our last post, we discussed how a 2005 federal law affected who in Staten Island can qualify to file for Chapter 7 bankruptcy. The post referred to Chapter 13 bankruptcy, which is another way for individuals with serious debt problems to get out from under them. Today, we will talk about Chapter 13 in more depth.
Chapter 13 bankruptcy is also called reorganization bankruptcy. It usually takes longer to complete than Chapter 7, which often finishes up in a few months. Instead, it can be three to five years before someone going through Chapter 13 is through.
However, Chapter 13 bankruptcy has one major advantage. Unlike in Chapter 7, you generally are not required to sell your assets. This means you are more likely to be able to keep your home under Chapter 13.
Your debts are not completely discharged as in Chapter 7. Instead, reorganization bankruptcy involves the creation of a repayment plan for at least a portion of the debt. The repayment, and the debtor’s budget, is overseen by a bankruptcy trustee appointed by the court.
As we discussed last time, Chapter 13 may be the best option available for many people who are hampered by debt, but nevertheless do not qualify for Chapter 7 under a means test. The chance to save their house is also an attractive feature for many.
Weighing your options on your own may be difficult. Those considering filing for bankruptcy should discuss their particular situation with a bankruptcy attorney, to receive more detailed guidance.