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If you acquired too many bills over the year, such as personal loans, credit cards, etc., and are not able to pay them, this can be very stressful for you. Some creditors may also harass you or even take you to court to get the money owed to them. To prevent all of this, you can file a Chapter 13 bankruptcy. Below is more information about this to help you decide if this is a good option for you.

Chapter 13 Bankruptcy

With a Chapter 13 bankruptcy you still repay your creditors, but it is like starting over from scratch. Each creditor will set up a repayment plan with you that you are able to afford. This repayment plan is generally up to five years. If you do not pay off the debt within the set time period, then the debts are discharged.

To get a Chapter 13 bankruptcy you must be employed or have some type of income that is enough for you to afford repaying your creditors. If not, you would have to file a Chapter 7 bankruptcy, which is erasing all your debt.

Benefits of a Chapter 13 Bankruptcy

Besides making it easier to pay off your debt there are many benefits to a Chapter 13 bankruptcy including:

Let You Keep Your House

If you are behind on your house payment you may end up with foreclosure. If you are at this point and file a Chapter 13 bankruptcy you can avoid this foreclosure and keep your home. If foreclosure proceedings have already been started, these proceedings will immediately stop.

You must make monthly payments on time after the Chapter 13 bankruptcy, however, or the lender can start foreclosure proceedings again.

If your mortgage payment was too high for you to afford your lender will adjust it according to the Chapter 13 laws to ensure you can afford the payment.

Help with Credit

Even though a Chapter 13 will affect your credit score filing a Chapter 13 stays on your credit report for seven years, while a Chapter 7 stays on for 10 more years. This is because with a Chapter 7 you will repay all or part of your loans, which looks much better to creditors then not paying for any of your debt.

Once the Chapter 13 is not on your credit report you can take steps to rebuild your credit.

Talk with a Chapter 13 bankruptcy attorney, such as at The law Offices of Siddons Law, for more help.. They can also give you much more information about this type of bankruptcy.