Bankruptcy offers businesses and individuals a way to restructure their debt and obligations with government oversight. While declaring bankruptcy often has a negative connotation, it is an option that should not be overlooked. There are many different types of bankruptcy, which are divided into chapters. It is important to decide what kind of filing will work best for your personal finances or business debts.
What is Chapter 13 bankruptcy?
As a general rule, chapter 13 is for those who feel that they need financial help, but they have sufficient income to restructure and pay off their debts while working. This type of filing will essentially just reorganize the debt to make it more manageable. Other solutions, like chapter 7, may require property to be sold off to meet obligations to creditors.
Reasons why chapter 13 is a good idea for some people in debt
There are a number of benefits to using chapter 13 versus other ways of managing debt or other types of bankruptcy. One benefit is that chapter 13 will allow you to hold onto your car loan or mortgage while your debt is paid off. Because someone is continually paying into the chapter 13 plan while earning from sources of income, they generally will not have to lose their home or other assets.
Payments that must be made towards debt under the chapter 13 plan are also smaller and more manageable than those under other restructuring plans. Your case will be set up so that your debts can be satisfied within three to five years. This allows many people to continue to have a fairly normal life while they are going through a bankruptcy proceeding.
Chapter 13 also stops creditors from traditional collection attempts and harassment that can come from agencies that buy junk debt. Creditors who ignore these bankruptcy rules can be subject to lawsuits and other action under the Federal Debt Collection Practices Act.
If there are other co-debtors who owe money, they cannot be pursued individually by creditors if you file for chapter 13. However, certain debts like child support, alimony, and back taxes can never be discharged through bankruptcy.
Individuals who can liquidate their assets to totally discharge all debts may be better off using a different process, such as chapter 7 bankruptcy. Chapter 7 is also recommended for people with little to no disposable income, as the debt can be discharged and does not have to be paid back once the case is completed.
You can speak with a Destin chapter 13 lawyer to learn more about how the process works and get an overview of the different types of debt restructuring that are available. Credit counseling is generally required before anyone can file for bankruptcy, so it is a good idea to talk to a professional before making major decisions.
More information is available for those who may need to declare bankruptcy
You can review your personal situation or business finances with a lawyer to determine if bankruptcy is the right choice for you. To speak with a local bankruptcy attorney in the Destin area, contact ASG Legal.