Many people file for Chapter 13 bankruptcy if they’re facing a foreclosure. In Chapter 13, you usually propose a plan for restructuring your debt, and usually you pay back less than 100% of your original unsecured debt amount. The result can be that you can keep your home and, after as little as 36 months of sticking to your payment plan, your unsecured debt could be gone.
Bankruptcy tries to give individuals and families overwhelmed by debt a “fresh start” on their finances. Bankruptcy laws can be confusing and are constantly evolving, so it’s important that you consult with a bankruptcy lawyer up to date. Filing for bankruptcy involves a lot of paperwork, and a mistake on a form could have drastic consequences on your financial future. It’s beneficial to have an experienced and knowledgeable bankruptcy attorney to help guide you through this process.
Chapter 13, also called the “reorganization” bankruptcy or the “wage earner’s plan”, has similarities to a debt repayment plan for consumers. Chapter 13 could offer advantages over Chapter 7 if the individual filing for bankruptcy is a homeowner. By filing under this chapter, many homeowners can stop the foreclosure process (though they must make all mortgage payments on time once under the Chapter 13 plan).