Chapter 13 bankruptcy is a wonderful tool for those who have too much of an income to qualify for Chapter 7 liquidation bankruptcy. Chapter 13 bankruptcy is special, because it requires you to make payments for three to five years. You'll make those payments on time each month. If you fail to do so, then your bankruptcy will not complete successfully.
Another significant benefit of Chapter 13 bankruptcy is a good tool for those who have the funds to make monthly payments but who are overwhelmed by their current debts. The amount you'll pay each month is generally lower than what you'd pay on each debt individually, and the amount is predetermined by the court. You'll pay that fee to the court or a trustee each month, and your debts will then be paid by your single payment.
After completing the program, you'll emerge from bankruptcy. The court will dismiss any additional debt that was included in the bankruptcy but not covered by the amount you paid during the three-to-five-year period.
Why choose Chapter 13 bankruptcy instead of debt consolidation?
With debt consolidation, there's no guarantee that your payments will end within five years. Additionally, you'll still be able to take on more debt. You'll likely pay a significant amount of interest, too.
A bankruptcy repayment plan is different. You only have to worry about making your payments on time for the amount of time the court orders. Once you finish, all your debts are wiped out, saving you time and money. Our site has more on Chapter 13 bankruptcy and why it may be right for you.