Chapter 13 personal bankruptcy protection is important for struggling consumers to fully understand because it serves as such a valuable resource to consumers seeking debt relief from their overwhelming debt. Chapter 13 bankruptcy is a reorganization bankruptcy option for struggling consumers and homeowners with a reliable source of income to consider.
Chapter 13 bankruptcy works by developing a repayment plan that will allow the filing party to repay their debt in installments over a 3 to 5-year period. It is important to note that the what is repaid is part of the bankruptcy process and may vary based on the filing party’s income, assets and circumstances. Once the repayment plan is complete, the filing party will receive a debt discharge and any debts not addressed in the bankruptcy will be discharged.
Chapter 13 bankruptcy also provides multiple protections against creditors which includes the temporary stay that is initially put in place once the bankruptcy filing has been made. The stay prevents creditor collection actions while the bankruptcy process progresses. In addition, payments that are part of the repayment plan are made to the bankruptcy trustee who makes payments to the creditors so the filing party does not have to deal directly with the creditor any longer. The process can provide relief from creditor harassment.
In addition to help with debts and creditors, Chapter 13 bankruptcy can also help homeowners facing foreclosure in some circumstances which is a resource it is also useful to be familiar with. Chapter 13 bankruptcy offers a fresh financial start without the need to liquidate assets to repay creditors which makes it important for parties with a reliable source of income wishing to enjoy debt relief to consider.