The Different Chapters of Bankruptcy 13 vs 7
A Chapter 13 bankruptcy is a type of reorganization bankruptcy. The goal of a Chapter 13 Bankruptcy is for an individual to restructure and pay-off debts over an extended period of time. A Chapter 13 differs from a Chapter 7 plan in which certain assets are liquidated to settle creditor claims. A plan of reorganization under Chapter 13 allows individuals to pay off their debts over a period of three to five years.
A Chapter 13 is general a favorable option for individuals that wish to repay their debts and that have a steady and sufficient source of income with which to do so over a three or five year period of time. Chapter 13 is also a good option for individuals that have valuable nonexempt property that would otherwise be liquidated in a Chapter 7 case.
A Chapter 13 bankruptcy can be an excellent options for homeowners that are behind on their mortgage to save their homes. This can be effective if the homeowner is simply a few months behind on the loan or if the lender has begun the formal judicial foreclosure process. If a foreclosure action has been filed, the automatic stay provision of the Chapter 13 bankruptcy immediately stops the foreclosure action in its tracks. The Chapter 13 plan allows the debtor to cure the arrearages the home via the plan of reorganization.
Under certain circumstances unsecured debts may be discharged in a Chapter 13. Generally, an individual will pay back only the portion of the unsecured debts that they can reasonably afford. For some individuals with little to no disposable income, their unsecured debts may be completely discharged and only the secured debts are paid on through the plan of reorganization.
Contact our team of Jacksonville Chapter 13 attorneys today for a Free Consultation to see if a Chapter 13 bankruptcy is the right solution for you.