Life can be unpredictable, and there are certain situations when one find themselves in the throes of financial difficulties. Whether it’s sudden unemployment or a serious medical condition in the family, people can easily lose their capacity to manage debts and other similar financial obligations at the blink of an eye. As a result, the government offers solutions to help individuals facing issues with their finances. By filing bankruptcy, the U.S. federal courts can grant to have a person’s debt be discarded or impose a debt repayment plan that are both aimed to help them regain financial control and stability. One option specifically meant for individuals are delineated under Chapter 13 of the U.S Bankruptcy Code.
A Chapter 13 bankruptcy is also referred to as a wage earner’s plan. When it is granted by the court to a debtor, Chapter 13 enables an individual receiving regular income to restructure their debt payments through a plan that will allow them to repay what they owe in regular installments over the course of three or five years. This new payment scheme is meant to allow for more leeway as an individual settles their debts through enabling them to make more affordable payments over a significant period of time. Unlike a Chapter 7 bankruptcy, those who petition for a wager earner’s plan will no longer have to see their assets or properties liquidated. It also allows sole proprietors to continue running their business and use the profits they earn to meet their regular payments according to schedule.
Anyone who petitions for a Chapter 13 bankruptcy will also be granted by the court with an automatic stay, which is a court order that prohibits creditors from taking any sort of action with regards to the debtor’s remaining balance. This means that debtors will be protected from harassing phone calls, emails, and any other form of contact. An automatic stay will also prevent creditors from filing lawsuits, attempting to repossess or foreclose properties and assets, as well as taking any other legal action against the debtor. Other benefits of filing a Chapter 13 bankruptcy includes the possibility of having the total loan amount reduced and the discharging of particular debts.
According to the website of Gagnon, Peacock & Vereeke, P.C., eligibility for this type of bankruptcy depends on several factors. The most important thing is to know whether one’s situation can be best helped by Chapter 13. For more information, contact an experienced bankruptcy lawyer in your area.