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The basics of a Chapter 13 bankruptcy

On Behalf of | Nov 11, 2017 | Bankruptcy

If you find yourself strugling with how to pay your bills and feel that they only seem to increase every month despite your efforts to make payments on them, you are far from alone. Many people in Pennsylvania are in a similar situation. For some, a bankruptcy may offer a good solution to the problem and provide a fresh financial start. However, before you jump too fast to get a bankruptcy filing started, you should learn about how a Chapter 13 plan works as it is different than a Chapter 7 plan.

As explained by the United States Courts, there are many differences between the two types of common consumer bankruptcies. One main feature of a Chapter 13 plan is that you will actually repay some of your debt over the life of your plan. You can think of a Chapter 13 bankruptcy as a form of debt consolidation. Over a period of 36 to 60 months, you will make monthly payments to your plan’s trustee. The trustee in turn will pay some of your creditors per an agreement made at the outset of the plan.

At the end of your Chapter 13 term, any remaining debt will be discharged. Another key element of a Chapter 13 bankruptcy is that you do not lose any of your assets as may happen in a Chapter 7 plan.

If you would like to learn more about how a Chapter 13 bankruptcy plan works and if it might be a good choice for your situation, please feel free to visit the wage earner’s plan page of our Pennsylvania debt relief and bankruptcy website.