Many of us have struggled with debt at some point, and may have even wondered what bankruptcy could do for us.
Chapter 13 bankruptcy, made for towards those with a stable income who are looking to reduce their debt, can be a viable option for someone who needs financial assistance.
According to the United States Courts, this process in particular has the benefit of replacing liquidation with a different way to pay back debt. One thing that separates this type of bankruptcy from Chapter 7 or Chapter 11 is the fact that individuals who are able to pay at least some of the debt must do so.
Instead of worrying about losing your home or other major items, you can focus on making a settlement plan for the future. This plan helps you plot out what steps you will take to repay your debt. Typically, it can take anywhere from two to five years.
Steps in the process
The first step you should take is to file for a reorganization plan, which helps prevent you from losing your house and helps you structure your debts so you can figure out what to do next. Note that while this goes on, you still must pay child support and taxes. Filing for bankruptcy does not relieve you of certain obligations.
You can only file for this process if you have not done so before in the last 180 days. A third party, such as a mediator, will help you organize your finances. After you confirm the plan, you will start making payments regularly, which will help you keep your end of the bankruptcy agreement.