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When Chapter 13 Bankruptcy Makes Sense

February 23, 2012 | Comments: 0 | Views: 151

There are some situations when Chapter 13 bankruptcy, also known as reorganization, makes the most sense. Individuals and married couples, who are facing financial difficulties and having trouble paying the bills, may wish to pursue this method as a way to make creditors happy. If you cannot pay your bills on time and are at the risk of facing judgments or lawsuits of other sorts, it may be time to take action by considering all of the options available to you.

In Chapter 13 bankruptcy, most unsecured debt, including credit cards and medical debt, are wiped out or paid in a small portion. However, other forms of debt, including car loans and secured loans are not. Over the course of three to five years, you will need to pay a monthly payment to the trustee, who will then send these funds to your creditors. At the end of this time, any remaining debt you have from unsecured lenders is discharged. This is unlike total liquidation, in which the debt is discharged in total within a few months. Reorganization may be the right decision for you for many reasons, including:

- If you have assets you do not wish to lose in the process, this option is a good one. In total liquidation, all excessive, unprotected assets are seized, sold, and the funds are sent to creditors. In this option, you keep them.

- If you do not qualify for total liquidation because you make too much income, this method can work for you, too. Failing the Means Test, a test to determine if you are at or under the poverty line, can mean no opportunity to get total liquidation. This, in itself, does not disqualify you from Chapter 13 bankruptcy, though.

- You may have recently filed for total liquidation. In most situations, you must wait a total of 8 years (this can differ from state to state) before you can re-file a second time. However, you can file for reorganization sooner than this.

In addition to this, some people do want to repay their debt, but they cannot do so according to the current terms. Under this agreement, you have the ability to do just that. It is important to discuss your situation with a Chapter 13 bankruptcy attorney though. These professionals will help you better to understand your options and your ability to qualify for either type.

Choosing to file is a big deal and it will have long-term repercussions on your future. However, in many situations, it is the best opportunity for you to improve your future financial situation. Talk to an attorney now.

Considering filing for Denver Chapter 13 bankruptcy? Get informed here:

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