Bankruptcy is a legal process that can help individuals and businesses eliminate or repay their debts. While bankruptcy is often viewed as a last resort, it can also be used strategically to negotiate better repayment terms with creditors, with the help of an experienced attorney. One way to do this is through the process of Chapter 13 Bankruptcy. Read on and reach out to an Orange County Chapter 13 bankruptcy lawyer to learn more about using bankruptcy to negotiate better repayment terms with the help of a skilled bankruptcy attorney.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to reorganize their debts and develop a repayment plan that spans over three to five years. During this time, the debtor typically makes regular payments to a bankruptcy trustee, who then distributes the funds to creditors according to the terms of the repayment plan.
Who is Eligible for Chapter 13 Bankruptcy?
The first thing to know about Chapter 13 bankruptcy is that not everyone is eligible to file. Only individuals with “regular income” whose unsecured debts are less than $419,275 and whose secured debts are less than $1,257,850 are eligible for relief under Chapter 13.
Can Chapter 13 help with repayment of debt?
In addition to the ability to negotiate a repayment plan, some of the pros of filing for Chapter 13 bankruptcy include:
- The court will reorganize your debts in order to help you determine the best way to handle repayments.
- The court will establish a thorough and reasonable plan for how you will repay your debts.
- Your unsecured debts, which refers to things like credit card debt, can be discharged and you won’t need to worry about paying them back, allowing you to focus on other areas of debt.
- The process can be lengthy, taking up to 5 years. However, this allows you more time to learn how to handle your finances more responsibly going forward.
- You will be able to catch up on paying back your secured debts, so you don’t lose important assets, like your home or car.
- Your loan co-signers won’t face consequences.