There are numerous circumstances that can lead to financial difficulties. Many of these are unexpected and at no real fault of the individual. In today’s tough economy with rising inflation it seems that almost everyone is struggling to keep their head above water. Then add an unforeseen event such as a job loss, a divorce, or medical bills from an illness or accident, can be devastating to an individual or family. Then you have people caught in a financial mess when their mortgage adjusts and they can no longer keep up on the payments. Maxed out credit cards with their high interest rates seem to be unending and unpayable. Maybe the individual then turns to payday loans to kick the can down the road a little further but really they are only delaying the inevitable. These things can all contribute to financial disaster resulting in lawsuits, repossession of property, wage garnishments, and foreclosure. The thing to remember is that doing nothing will not solve the problem but actually make it worse. This is why the bankruptcy code was created. Filing bankruptcy offers people relief from overwhelming debt while allowing them the ability to retain personal property such as their house.
Chapter 13 Bankruptcy, also known as reorganization bankruptcy, was designed for individuals such as these. Chapter 13 Bankruptcy is typically filed by people who are employed, have large amounts of debt, and want to be able to pay off this debt over an extended period of time all while under the protection of the law. Chapter 13 really appeals to people who have a fair amount of valuable personal property that they wish to keep in the bankruptcy filing. When an individual files a Chapter 7 Bankruptcy they eliminate their unsecured debts but they may lose personal property if it is not protected by exemption laws. Certain property is exempt, but if the individual has a lot of property or assets some of it may be non-exempt and sold in the Chapter 7 Bankruptcy to pay creditors back. This is why a Chapter 13 Bankruptcy may be a better fit for people that have non-exempt property that they want to keep. As long as the filer has a regular, predictable income then they are a candidate for Chapter 13. The filer along with their attorney will submit a feasible repayment plan with a three to five year timeframe to the bankruptcy court. The secured debts are the first to be paid with the unsecured debts getting whatever is left after the priority debts are taken care of. At the end of the arranged timeframe, if any unsecured debts are left over then they will be eliminated in the bankruptcy discharge. At any time during the three to five year repayment plan if the financial situation of the debtor changes, such as they take a cut in pay or lose their job, the Chapter 13 can be readjusted or converted to a Chapter 7. This is why it is a popular choice for many since the plan is so flexible and can be changed to accommodate the needs of the debtor. Filing Chapter 13 Bankruptcy will not only give you a fresh start but allow you the opportunity to take control over your financial situation.
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