Unfortunately, since the economic downturn, more individuals and businesses have faced bankruptcy. When most people think of bankruptcy, they think of Chapter 7. However, there are individuals who want to know when to file Chapter 13 bankruptcy. Although it is not necessarily a worse type of bankruptcy, it is not the one that most people consider when they are ready to file.
The reason most people do not want to file for Chapter 13 is because it requires that the debtor follows a court approved repayment plan.
The Repayment Plan
This type of repayment plan mandates that the debtor and his or her lawyer submit a repayment plan that will last at least 3 years. The majority of repayment plans lasts between 3 to 5 years. Even though most people who file for bankruptcy believe that they should not repay anything, they can experience several benefits by knowing when to file Chapter 13 bankruptcy.
One of the biggest advantages is that debtors can decide if they want to keep any of their property or not. It is also similar to Chapter 7 in that debtors will have automatic stay on their debts as long as their case is going through the legal process.
When filing for Chapter 13, the debtor has the opportunity to have an automatic stay placed against foreclosure. This will help to protect their family as long as the case has not been discharged.
One of the lesser known benefits to filing for Chapter 13 is that this type of bankruptcy offers flexibility. Some debtors ask their bankruptcy attorney what consequences would they face if they could not continue with their repayment plan as scheduled. In many instances, the plan will be modified in order for the debtor to meet their obligation.
The majority of time the bankruptcy court is very understanding in that circumstances do changes in a personal’s financial life over the period of years. Divorce, a change in employment status and illness can all affect a person’s finances. If any of these things occur during the repayment period, the debtor can call their lawyer and ask for a modified plan.
So, when to file Chapter 13 bankruptcy? You can file if you prefer to repay your creditors instead of having your assets liquidated. You can get that new financial start that you need.
Schedule a consultation to learn more about your bankruptcy and debt relief options.