An introduction to Chapter 13 bankruptcy
Many Florida residents understand that they need help to address serious financial challenges, but they may not always know what kind of assistance for legal options they are entitled to. Filing for bankruptcy is one option that has proven to be very successful for countless Americans throughout the years, but different forms of bankruptcy can be more helpful to people under specific circumstances.
Chapter 13 bankruptcy differs from Chapter 7 bankruptcy in several ways, one of them being that a trust fund is established in order to pay off creditors. A person known as a trustee is charged with managing the trust, and enforces the terms of the bankruptcy plan by distributing trust funds to the appropriate parties. People that file for Chapter 13 agree to pay into the trust fund and follow the terms of the bankruptcy agreement, while being released of some of their liability as debtors.
While Chapter 7 bankruptcy is the recommended choice for some people, Chapter 13 is often preferred by people that own property. Property can be protected against Chapter 13 proceedings because filers agree to repay creditors through the trust fund. And in the event that a creditor is unwilling to accept the terms of the bankruptcy plan that is offered to them, they have the right to object. Each Chapter 13 bankruptcy is different, but most are finalized within a five-year period.
Chapter 13 bankruptcy can be the best option for people that own property and are willing to commit to a long-term plan for repaying their debts. Of course, however, learning about all of one’s debt relief options is recommended before committing to anything. People that are interested in exploring their options and understanding how Chapter 13 may benefit them can speak with an experienced lawyer today.
Source: Michigan State University, “Should you file bankruptcy? Part 4,” William Hendrian, July 15, 2014