A person who is overwhelmed by debt is likely going to try to find some relief. For some, the only reasonable option is to file for bankruptcy. Unfortunately, there are negative connotations associated with filing for bankruptcy because some people believe this gives you a free way out of all your debt. However, many people facing financial challenges still end up repaying a significant portion of their debts through a Chapter 13 bankruptcy and repayment plan instead.
If you’re considering a Chapter 13 bankruptcy, you might wonder exactly what a repayment plan is going to entail. There are several factors that have to be considered. Your income and necessary bills are at the top of the list and help determine your ability to repay some of your debt over time. Once you have this information, a payment schedule can be made toward your debts. The payments that you are required to make will go to the bankruptcy trustee for as long as you remain in bankruptcy, which is generally three to five years for a Chapter 13. You must make all the payments on time so that your case can move forward.
Some people worry about what life will be like while their case is still open. It is likely going to be much different than it is now because you aren’t fully in control of your own finances. You are going to be on a limited income. You can’t obtain new credit during the bankruptcy proceedings, so you will rely on your income only. There isn’t going to be much wiggle room, at first, for extras.
Despite the inconveniences, a Chapter 13 bankruptcy may be able to help you improve your finances when you have plenty of income but unmanageable debts. The time you spend in bankruptcy means nothing if it can give you a future that’s debt-free and less stressful. For more information, please contact our office.