The Law Offices of Kenneth E. Lindauer
Call today for free initial consultation

What is Chapter 13 bankruptcy?

When an individual in the state of Massachusetts is struggling with debt, he or she may feel overwhelmed by the amount of financial material that is available. Having financial difficulties is challenging, especially if a person doesn't know about the available options. There are several categories of bankruptcy that may be applicable when someone is considering options for dealing with a large amount of consumer or medical debt. One of those options is Chapter 13 bankruptcy.

Chapter 13 bankruptcy, according to information from FindLaw, is known as reorganization bankruptcy. This means that people who file for Chapter 13 are able to reorganize their debts into manageable payments. It could involve some debts being absolved, depending on the circumstances. This is in contrast to Chapter 7 bankruptcy, which typically involves asset liquidation. Filing for Chapter 13 bankruptcy, however, involves meeting certain eligibility requirements.

If someone files for Chapter 13 bankruptcy, he or she must be able to show a court that he or she can pay off all debts with some source of income. There are also certain debt limits for individuals to be eligible for filing for this type of bankruptcy. One of the first steps in filing for Chapter 13 is to get credit counseling from an agency approved by the U.S. government. A court will determine the terms of the repayment plan, including amounts and frequency, based upon a debtor's income and debt size.

Repayment plans can last from three to five years, depending on eligibility requirements. It's important to be cognizant of how much filing for bankruptcy can help those who are struggling with credit card or medical bills. Debt relief can take many forms and Chapter 13 bankruptcy is one of them. Please note that this is not specific financial or legal advice, but simply a general overview of Chapter 13 bankruptcy.

Source: FindLaw, "Chapter 13 Bankruptcy," accessed on Sept. 5, 2014

No Comments

Leave a comment
Comment Information