People who have assets that they want to keep or who have the means to repay a portion of their debts might file a Chapter 13 bankruptcy if they need to reclaim their finances. This form is usually known as the wage earner’s plan since you will be making regular payments to the bankruptcy trustee. Those payments will be used to pay off creditors in a way that is in accordance with the applicable laws.
It is imperative that you are completely honest about your finances when you are filing a Chapter 13. The court has to know that you will be able to afford the payments to the trustee and your regular living expenses. You might not have much left after all of this is paid, but that financial struggle will only persist until your case is discharged.
We know that this might be a lot to think about, but when you think about how much you are paying to individual creditors now, you might realize it is worth it. While your case is in process, you will learn to live on the income you have. You will have time to fine-tune these skills since you can’t obtain new credit while your case is open.
Once the bankruptcy is discharged, you will be able to start rebuilding your credit. This will take a while and will usually require you to get a secured card to start out with. Hopefully, you’ve learned about good credit usage so you can start boosting your financial independence and might be able to avoid future bankruptcy filings.