Nearly everyone has experienced financial challenges at one point or another. Some of us are fortunate enough to find relief and claw our way out of debt. Others, though, may find themselves feeling overwhelmed and hopeless. For these individuals, more formal forms of debt relief may need to be sought out. Bankruptcy may be a legitimate plan for many of these individuals. Chapter 7 and Chapter 13 bankruptcies may allow a debtor to discharge debt and find the new start they need. But many Wisconsin residents may find themselves asking how the process will affect their day-to-day life.
Under Chapter 13 bankruptcy, a debtor must make payments to the bankruptcy trustee, who will then disburse those funds to creditors. The payments to the trustee can be made directly, or they can be taken out of the debtor’s paycheck. Since Chapter 13 bankruptcy can last for an extended period of time, these individuals should be sure to budget accordingly.
Also, an individual going through a Chapter 13 bankruptcy may be disallowed from taking on new debt. The reason for this is that new debt may threaten the bankruptcy plan already approved by the court. Therefore, if new debt is a necessity, it should be discussed with the trustee before being acquired.
The bankruptcy code is long and can be confusing. Yet, failing to abide by the law could result in a Chapter 13 bankruptcy being converted to a Chapter 7 bankruptcy, meaning that a debtor’s assets may be sold to satisfy debts. Therefore, those considering bankruptcy need to carefully consider their options and acquire legal assistance if they deem it necessary.
Source: United States Courts, “Chapter 13 – Bankruptcy Basics,” accessed on Dec. 14, 2015