Chapter 13 is a type of bankruptcy that lets you set up a debt repayment plan according to your income and needs. Then you repay the debt over a 3-5 year period.
While you're in a Chapter 13, creditors can't collect from you or otherwise harass you.
Sometimes people choose Chapter 13 simply because they don't qualify for Chapter 7; but there are actually some great things about Chapter 13 that make it a good fit for a lot of people.
Here are five reasons Chapter 13 might be the right option for you:
1. Get an Automatic Stay
Once you file Chapter 13, you are protected from legal actions against you through something called the "automatic stay." That means filing will stop foreclosure, car repossession, and wage garnishment.
2. Keep Your Property
Unlike Chapter 7, Chapter 13 bankruptcy allows you to keep certain property that you might lose otherwise. If you're concerned about keeping your home, for example, there are times when Chapter 13 might be the only way.
3. Lower Your Debt
With Chapter 13, you can often lower the amount you owe on certain debts. You can sometimes even lower the interest rates as well.
4. Protect Other Areas of Your Life
Run your own business and don't want the bankruptcy to hurt it? Chapter 13 is easier on sole proprietors who need to get out of debt. It also protects co-signers — family, friends, and business partners who've signed on to your debt — from being pursued by creditors.
5. Make Life a Little Easier Down the Road
Some banks and other lenders will look more favorably on Chapter 13 than on Chapter 7, as it shows you made the effort to repay some of your debts in an organized way.
There are many other reasons to file Chapter 13, and each specific situation is unique. Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.