After reading about Chapter 7, you may be wondering, "What if I make a lot of money, have assets I want to keep, don’t want someone to go after my co-signer/codebtor, or feel morally obligated to pay all my debt? What if I just need a bit more time and people won’t work with me?" Then Chapter 13 may be more appropriate to your needs.
For people who have had a seriously rough patch and may be able to pay all or nearly all of their debts if they only had more time, Chapter 13 is the most effective way to get you on the road to financial stability. In a Chapter 13, you look at all your debts, including ongoing payment obligations and the amounts you are behind, and make a new payment plan for a 3-5 year period. It isn’t like refinancing your debts, but rather the Court helps you force your creditors to agree to modify your loan agreements. This gives you time. If you think back on where you were 5 years ago, you can see how much can change in that time. You could get a new job or promotion. You could inherit money. You could be physically healthier and not need so much medical treatment. If you need time to improve your circumstances, Chapter 13 helps you create a plan and stick to it. As your situation improves, you may need to pay more of your income to cover your debts. The good news is, you keep your home, your car, most of your assets, and learn to live within a tight budget.
Of course some people will have new obstacles present themselves during that period of time. You may find your health declines, lose your job, or any other number of challenges. If that happens, the Chapter 13 can easily be modified to adapt, or even converted to a Chapter 7 under many circumstances. So you aren’t stuck if your life changes and you need additional help.
When people have been living beyond their means for some time, the payment schedule seems painful and harsh, which leads to very few people completing their plan. This is part of the fundamental equity of the bankruptcy system. If you want to keep your assets or have decent income, you cannot just skip out on all of your creditors. The Court doesn’t send people to jail for unpaid debts, but it also doesn’t allow someone to live extravagantly and let their creditors foot the bill. A qualified attorney can help explain the options in Chapter 13, the repayment schedule, and help set you up for success. When you emerge from bankruptcy under this Chapter, you will be in a great financial position with your assets intact and your debts discharged or manageable long term.
To explore your options, call us today for a free, no obligation consultation.