Floridians who find themselves facing overwhelming debt, the constant calls from creditors and daily worry as to what the future holds will want to think about possible options to get into better financial shape. For many, bankruptcy is not something they immediately consider. This could be for many reasons including the belief that it is somehow shirking their responsibilities, a negative perception as to what it entails or overt fear that they will lose their property. People who own a home, an automobile and have other assets they want to retain should understand how Chapter 13 bankruptcy can benefit them. There are certain facts to be aware of from the start.
Key benefits of a Chapter 13
Chapter 13 differs from Chapter 7 in that people can retain their property rather than it being liquidated with the proceeds being used to repay creditors. With Chapter 13, people will have a payment plan they can afford. The payments will be made to a trustee who will subsequently distribute portions of it to creditors. If the debt is secured by collateral – like an automobile– then the creditor must be guaranteed to receive at least the value of the property as part of the plan. The payments on unsecured claims are based on the debtor’s disposable income and are unlikely to need to be paid back in full, but the unsecured creditor must be paid what they would be if there was a liquidation.
How long will a Chapter 13 bankruptcy take before there is a discharge?
Chapter 13 is generally for people who have a job with consistent income. The repayment plan proposal is based on the income. The state’s median income is a fundamental part of the process. If a person is making less than that median income, the repayment plan will last for three years. The court can order it to be longer if there is reason to do so. If the income surpasses the state median, the plan will be for five years.
Bankruptcy can be complicated and having assistance may be critical
There is nuance to a bankruptcy filing and this should be known from the start. For some, a Chapter 13 is simply untenable based on the income requirements, the debts and other circumstances. However, Chapter 13 has several advantages including keeping certain properties, the payments being based on their income and putting an end to creditor harassment. To understand which is preferable based on their situation, it is useful to consult with those experienced in bankruptcy cases.