Chapter 13 bankruptcy is one option to consider for those seeking debt relief. Chapter 13 bankruptcy provides one option that may help address debt-related concerns while also protecting the filing party's property.
Chapter 13 bankruptcy is considered a reorganization bankruptcy that allows the filing party to reorganize their debt rather than liquidate assets to repay creditors. Different bankruptcy options fit different situations so it helps to be familiar with what all the options are when seeking debt relief. If the filing party earns more than the median income in their state, based on their last six months of income, they will need to file for Chapter 13 bankruptcy protection, whereas, if they do not, Chapter 7 bankruptcy protection might be the best option for them.
Chapter 13 bankruptcy protection allows a filing party with a reliable source of income to restructure their debts so that they repay it over a period of time such as three to five years. Chapter 13 bankruptcy carries the benefit of allowing the filing party to keep most, if not all, of their property including a family home while Chapter 7 bankruptcy may require liquidation of non-exempt assets to repay creditors. It is important to note, however, that some assets are exempt from the Chapter 7 process.
Fully exploring available options is the best step those seeking debt relief and wondering what to do can take. Matching bankruptcy protection options, such as Chapter 13 bankruptcy, with the situation and needs of the filing party is an important step along the path to debt relief.