For people in Florida who have regular income but who are struggling to keep up with bills and payments, Chapter 13 bankruptcy may offer relief. With a Chapter 13 bankruptcy, also sometimes referred to as a wage-earner’s bankruptcy, the filer’s debts are reorganized and paid down over a period of between three and five years. At the conclusion of the repayment period, most of the remaining unsecured debt is typically discharged.
Chapter 13 process
A Chapter 13 bankruptcy case begins with the filing of a petition with the bankruptcy court. The debtor will also have to create a proposed plan for repaying creditors. Once the repayment plan is approved by the court, the debtor sends monthly payments to a trustee who then distributes the payments to creditors. According to the American Bankruptcy Institute, somewhere between 40% and 70% of Chapter 13 bankruptcy cases are successfully completed.
Benefits of Chapter 13 bankruptcy
As soon as a bankruptcy petition is filed, all collection actions and payments due stay during the pendency of the case. That is, all payments are put on hold, giving the debtor some freedom to gather their bearings. It is common in Chapter 13 for the debtor to be able to keep their primary residence, along with other necessities. For small business owners, a Chapter 13 filing allows the company to keep running, so long as it generates funds sufficient to make the required plan payments.
Deciding whether to file Chapter 13
Bankruptcy is a serious legal process and should not be entered into lightly. Those who file for Chapter 13 protection usually have regular monthly income but not enough to pay down their debts. For people who have maxed out their credit cards and struggle to pay for the things they need, Chapter 13 bankruptcy might allow them relief and a fresh financial start.