When you’ve decided to file for Chapter 13 bankruptcy, it puts you in a position that is different from that of people who file for Chapter 7 bankruptcy. Where a Chapter 7 bankruptcy discharges almost all of your debts, under Chapter 13 the terms of your debts are modified with the specific mission of making it easier for you to satisfy your creditors.

In most cases, a Chapter 13 bankruptcy will allow you to pay off your debts in a five-year period. The repayment plan may extend the amount of time you have to pay off the debt as well as reducing the amount that you have to send for each payment. It may also allow you to simply relinquish ownership of the item that you’re paying the debt on.  In many cases a creditor will even lower the original debt amount, viewing it as more beneficial to secure a partial payment then to have the entire thing discharged under a Chapter 7 order.

Not only will spreading out the amount of time you have to pay off a debt or lowering your monthly payment relieve you of a lot of stress, if you file for a Chapter 13 bankruptcy and are still unable to pay off some of your debt, you may be able to file for bankruptcy again within six years. This is not true if you choose to file a Chapter 7 bankruptcy, which includes a six-year bar against filing for bankruptcy again. Additionally, you avoid the stress of having to relinquish some of your assets.

A repayment plan under Chapter 13 bankruptcy is planned around your income and your debts. In some cases, it may make things easy enough that you are tempted to pay off the balance of your debt early in order to put it behind you, but this would be a mistake.  By beginning to accelerate payments, you alert your creditors to your access to cash, and they are able to increase your payments or revise your payment plan.

For more information on the many advantages and disadvantages of filing for a Chapter 13 bankruptcy, contact our experienced bankruptcy attorneys today. We are here to help.

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