When you want to file for personal bankruptcy, you will need to choose between Chapter 7 and Chapter 13. While both options will give you the chance to get rid of your debts, they are quite different in many ways.
You may hear people refer to Chapter 13 as the wage earner’s plan. The reason for this is that this type of bankruptcy involves developing a repayment plan and repaying as much of your debt as possible while also keeping you under the protection of the automatic stay, which prevents creditors from taking collection actions against you.
One of the perks of Chapter 13 is that you can often keep your assets, according to the U.S. Courts. With Chapter 7, the court will seize assets to liquidate and use that money to pay back your creditors. In Chapter 13, things happen a little differently because of your repayment plan, meaning that you can usually keep important assets, such as your home and vehicle.
Since Chapter 13 allows you to repay your debts, you are not getting rid of them, therefore, you may be able to protect co-signers. A co-signer agrees to pay the debt if you cannot do so, but since you are repaying, the co-signer may avoid collections against him or her.
When you create your repayment plan with a bankruptcy lawyer Norfolk, you will outline a way to repay your outstanding debts over a period of three to five years. This may allow you to stretch out payments and lower them.
Plus, your repayment plan consolidates all of your debts into one payment. So, by making only one payment per month, you can better control your spending and ensure you can afford the payment. It can be much easier and cheaper to do this than to try to keep paying each individual debt.
It is essential when choosing which type of bankruptcy to file that you think about the pros and cons of each. Chapter 7 and Chapter 13 are quite different in many ways, so you must choose the option that best suits your particular situation.