Understanding Bankruptcy: Chapter 13 Bankruptcy

We talked earlier about filing for Chapter 7 bankruptcy. As a liquidation bankruptcy, any non-exempt assets you own can be sold to satisfy creditors during a Chapter 7 bankruptcy. Losing assets or a home is a primary concern of consumers filing bankruptcy. A Chapter 13 bankruptcy allows you to keep all or some of your assets and, in many cases, your home. 

Known as a wage earner’s bankruptcy, Chapter 13 bankruptcy is for consumers who have a regular source of income or who may not qualify under the means test to file for Chapter 7.

What is Chapter 13 Bankruptcy?

If you have fallen behind on mortgage payments and other bills, Chapter 13 provides you a period of approximately three to five years to catch up and repay bills while enjoying the protection of the bankruptcy court. Consider these points about Chapter 13 bankruptcy: 

• For homeowners, falling behind on a mortgage payment is a serious problem that is hard to cure without help. A Chapter 13 bankruptcy filing provides breathing room to work with your lender and make payments to avoid foreclosure.
• A primary feature of a Chapter 13 bankruptcy is the creation and filing of a repayment plan. Under an approved repayment plan, regular payments are made to the bankruptcy trustee, who distributes the money to creditors.
• Chapter 13 is often more attractive to creditors, who generally receive more than in a Chapter 7 bankruptcy.
• In a Chapter 13 bankruptcy, you repay most debt. In a Chapter 7 bankruptcy, unsecured debt is discharged. 

In Jacksonville and elsewhere, it is important to put together a realistic repayment plan that you can live with for several years. If you are considering Chapter 13 in Jacksonville, Florida, seek experienced legal advice. 

Attorney Shane Herbert also contributed to this blog post.