For some people, Chapter 13 bankruptcy, which is also known as a wage earner’s plan, can be an effective means of escaping severe financial distress. However, many people do not understand what a Chapter 13 bankruptcy entails, or what its benefits are. Here are five important facts you should know if you are considering declaring Chapter 13 bankruptcy:
- It can remove most or all of your debt
- Like all other forms of bankruptcy, the main appeal of Chapter 13 bankruptcy is that it allows you to discharge all or most of your debt. However, in the case of a wage earner’s plan, that is contingent on completing a repayment plan, which you will normally make with the help of a bankruptcy lawyer. If the court approves the repayment plan and you stick to it, your debt can be discharged within three to five years.
- You can avoid eviction or foreclosure
- People often fear bankruptcy because they believe that if they declare bankruptcy, they will lose their homes and be forced onto the streets. However, the opposite is actually true. When someone declares bankruptcy, the court issues what is known as the automatic stay, which (among other things) halts all ongoing eviction and foreclosure proceedings, allowing you to stay in your home.
- You can avoid the risk of liquidation
- One of the important ways that Chapter 13 bankruptcy differs from the more conventional Chapter 7 “liquidation” bankruptcy is that you do not need to fear you will lose all of your stuff. Instead, you will repay your debts in accordance with the court-approved repayment plan. In this way, you can avoid needing to sell all of your stuff just to pay off creditors.
- Debt collectors will stop calling you
- One of the most stressful aspects of being in severe debt has little to do with the debt itself, and has more to do with the constant efforts to collect on what you owe. Debt collectors are a constant nuisance, but fortunately, when you declare Chapter 13 bankruptcy, you will not need to deal with them anymore. Instead, creditors will negotiate directly with the court, giving you relative peace for what may be the first time in years.
- You can keep living your life
- One of the biggest benefits to a Chapter 13 bankruptcy is that you do not necessarily need to change much about how you live. Many people who go through this type of bankruptcy do not see a substantial change in their quality of life, and are able to complete the process while still being able to enjoy a normal lifestyle. However, to really know if Chapter 13 bankruptcy is right for you, it is best to contact a bankruptcy lawyer who can advise you on your options.
Bankruptcy is a complicated and stressful process, and one you shouldn’t attempt to undertake on your own. If you are in severe financial distress and considering bankruptcy, call the bankruptcy attorneys at McGuire, Pelaez & Bennett at 631-348-1702, or visit our contact page. Our offices are conveniently located in Central Islip, right here on Long Island. Our bankruptcy attorneys will work with you to ensure the best possible outcome for you and your family, and make sure that you gain the maximum possible benefit from bankruptcy protection.
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