For many, it is hard to understand exactly what bankruptcy is and how it can benefit them. Filing Chapter 13 bankruptcy, for example, is a way for a person to gain control of his or her finances without having to give up everything that he or she owns. With this type of bankruptcy, a person will only have to make one payment per month to a trustee. The trustee is then responsible for paying each of that person’s creditors. Many Florida residents choose this method to catch up on their bills.
When a person files Chapter 13, he or she agrees to pay back a portion of what he or she owes. The amount is decided according to how much he or she makes and how much is owed. A person who has a steady paycheck and wants to keep his or her assets might choose this type of bankruptcy. All forms of debt collection are to be stopped when Chapter 13 is filed. A person’s home cannot be foreclosed on, his or her paycheck cannot be garnished, and debtors cannot continue to harass the client.
It takes anywhere from three to five years to finish paying off a Chapter 13 bankruptcy, and it stays on a person’s credit report for seven years. Payments are made according to priority. For example, taxes would come first, then child support, alimony, etc. Lenders would be after that, with credit card companies, hospital and medical providers, utility companies, and other debtors coming in last.
Those Florida residents who are considering filing bankruptcy may want to consider Chapter 13. A bankruptcy law attorney can help guide the client in which type would be the best choice for him or her. Whether a person files this type of bankruptcy or another, it can be a good way to get a fresh start on reigning in his or her debts.
Source: Quicken Loans, “The Difference Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy“, Victoria Araj, Accessed on June 2, 2017