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Texas Chapter 13 bankruptcy's advantages to consumers

We all have our share of financial troubles. Given the unemployment rate, the high price of commodities and living expenses, even residents of Tyler, Texas, are bound to experience their own financial hardships. Unfortunately, when debt gets out of hand, it can begin to affect an individual's life. However, debt problems do have solutions, and sometimes that can be Chapter 13 bankruptcy.

According to United States Courts, Chapter 13 bankruptcy allows consumers to repay their debt by means of manageable payments. This means that a debtor can eliminate their debt with their regular income. It is actually called a wage earners plan because people whose gross medium income is above the state median are eligible to file for Chapter 13 bankruptcy. Under Chapter 13, debtors may propose a manageable repayment plan that may not affect the consumer's financial situation and provides them an adequate income to cover living expenses, including utilities. To pay the debt, consumers make monthly payments over a three to five year period. The amount of the installment payments would be based on the results of the negotiations between the creditor and the debtor.

The nature of Chapter 13 bankruptcy is clearly different from Chapter 7. It also provides more advantages to consumers who still want to be financially stable after repaying their debts. Chapter 13 prevents foreclosure. This means that even though a person files for bankruptcy, the debtor can keep their homes from going into foreclosure. Chapter 13 automatically stops the foreclosure proceedings and allows consumers to catch up on their delinquent mortgage payments.

Additionally, Chapter 13 bankruptcy can stop creditor harassment. This bankruptcy law prohibits creditors from starting or continuing their collection efforts during the repayment period. Because of this, a debtor can freely repay the debts without worrying about the creditor's tactics and strategies to collect the payments.

Source: USCourts.gov, "Individual Debt Adjustment," accessed on Oct. 2, 2014

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