In today’s unpredictable economy, many Americans face financial challenges that lead to the possibility of bankruptcy. While it may feel daunting, filing for bankruptcy may be necessary to get a fresh start and relieve some of the stress that comes with financial struggle. There are two common types of consumer bankruptcy: Chapter 13 and Chapter 7. Today, we’ll dive into the specifics of Chapter 13 bankruptcy and compare it to Chapter 7.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, also known as a wage earner’s plan, is a reorganization of debt that allows you to pay back creditors over three to five years. It’s commonly used by individuals with a steady income who need to make payments on their debts but wish to avoid liquidation of their assets. In Chapter 13 bankruptcy, a debtor proposes a payment plan to the court that is either three or five years, depending on their income.

How is Chapter 13 Bankruptcy Different from Chapter 7?

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy does not involve the liquidation of assets. In Chapter 7 bankruptcy, all non-exempt assets are sold to pay off creditors. Chapter 13 bankruptcy allows the debtor to keep their property and catch up on any missed payments through the payment plan. Another key difference is that Chapter 13 bankruptcy filers must have a viable income to make payments on the proposed plan, whereas there are no income requirements in Chapter 7 bankruptcy.

Benefits of Filing for Chapter 13 Bankruptcy

There are many benefits of filing for Chapter 13 bankruptcy. First and foremost, it allows you to keep your property while catching up on past due payments. You’ll have three to five years to pay back your debt, which can give you some breathing room and alleviate the stress of dealing with creditors. Additionally, Chapter 13 bankruptcy may help you get caught up on secured debts such as car payments and mortgages. Finally, filing for Chapter 13 bankruptcy stops collection agencies and creditors from harassing you while you work to pay off your debt.

We Can Assist the Mississippi Public with Bankruptcy

If you’re considering filing for bankruptcy, it’s important to have an experienced bankruptcy attorney on your side. At J. Madison Brooks III, Attorney at Law, we’re dedicated to helping our Mississippi clients navigate through the bankruptcy process. We can assist with both Chapter 13 and Chapter 7 bankruptcy filings and help you determine which option is best for you. Our commitment is to provide you with the support and legal guidance you need to get a fresh start.

In conclusion, filing for Chapter 13 bankruptcy can be an effective option for those with a steady income who need to make payments on their debt while keeping their property. Understanding the differences between Chapter 7 and Chapter 13 bankruptcy is crucial when determining which option is best for you. The benefits of filing for Chapter 13 bankruptcy include getting caught up on past due payments, protecting your property, and putting a stop to creditor harassment. At J. Madison Brooks III, Attorney at Law, we’re here to provide the legal assistance and support you need to take control of your financial future.