How Chapter 13 bankruptcy can help you recover from extreme debt

On Behalf of | Jun 6, 2023 | Chapter 13

Nothing is more frustrating and overwhelming than hitting a financial wall, making you uncertain about what to do next. Suppose your bills keep piling up and creditors are breathing down your neck; Chapter 13 bankruptcy may be the solution you’re looking for. Chapter 13 bankruptcy is commonly known as the wage earner’s plan because it is designed to assist individuals with regular income who are overwhelmed by debt. 

Unlike Chapter 7 bankruptcy, which tends to involve liquidating assets, it offers a repayment plan that allows you to retain your property while making affordable monthly payments to your creditors. Let’s delve deeper into how Chapter 13 bankruptcy can be a game-changer for those with extreme debt.

Allows you to develop a manageable repayment plan

One of the key advantages of Chapter 13 bankruptcy is the opportunity to develop a manageable repayment plan tailored to your unique financial situation. This plan typically spans three to five years, during which you can make regular payments to a bankruptcy trustee. The trustee then distributes these funds among the creditors. This structure would allow you to gradually repay your debts without facing the immediate pressure of collection actions.

Protects you against foreclosure and repossession

When struggling with extreme debt, the fear of losing one’s home or other valuable assets can be overwhelming. Thankfully, Chapter 13 bankruptcy helps provide a crucial shield against foreclosure and repossession. By filing for Chapter 13 bankruptcy, you can put an automatic stay on any foreclosure or repossession proceedings so that you can catch up on missed payments and maintain ownership of your property.

Eliminates unsecured debts

Unsecured debts, such as credit card bills and medical expenses, can be a significant source of financial strain. Chapter 13 bankruptcy offers the opportunity to help eliminate or reduce these unsecured debts. 

You can prioritize certain debts through the repayment plan while discharging others entirely. This would allow you to focus on paying off the most critical obligations while obtaining relief from burdensome unsecured debts.

If you’re struggling with extreme debt, Chapter 13 bankruptcy can be a lifeline, providing a structured path toward financial recovery. It offers a manageable repayment plan and helps protect you against foreclosure and repossession, so you can get a fresh start.