The most common form of bankruptcy available to consumers is Chapter 7, which allows those who struggle with their debt to give up their personal property and submit to some financial restrictions in return for financial relief from debts they cannot pay. However, some individuals have the means to pay their debts off over time, but still need structure to help get back on track financially and protection from aggressive collection tactics.
Those who do have sufficient income to pay their debts may qualify for a Chapter 13 repayment plan, which may be preferable to a standard Chapter 7 liquidation of assets. Under Chapter 13, debtors must submit to financial restrictions against accruing more debt for a period of time and will see their credit score suffer, but they may not need to forfeit their property. The repayment plan lasts between three and five years.
Chapter 13 aims to give those with means the freedom to repay their debts at a sustainable rate without requiring them to give up property unnecessarily. While Chapter 13 does not always protect all of a debtor’s property, as long as the property is not deemed excessive by a court and does not exceed certain value thresholds, the debtor keeps what they have as long as they comply with all other aspects of the repayment process.
If your income is sufficient, a repayment plan may be the right fit for your financial recovery. Take special care to scrutinize the details of your situation through the eyes of the law to make sure that you take full advantage of all the benefits and protections that Chapter 13 may offer you on your way to a fresh financial start.