Chapter 13 Bankruptcy can be a favorable option for those who have financial issues and seek to retain ownership of certain assets. Chapter 13 Bankruptcy requires that debtors use a payment plan to pay off their debts to creditors. This type of bankruptcy requires that individuals commit to a payment plan that lasts three to five years. The court will seek to ensure that debtors are up-to-date on their payments with creditors; otherwise the court will terminate the payment plan and may not discharge the individual’s debts. In addition to having extended time to repay creditors, here are the top five reasons people file for Chapter 13 Bankruptcy in Ohio.
With the spike in foreclosure rates in the U.S., many homeowners have been forced to grapple with the possibility of losing their home to a lender. When a homeowner is facing foreclosure, Chapter 13 Bankruptcy can provide a way to prevent the foreclosure from being immediately entered on the record. When a homeowner files for Chapter 13 Bankruptcy, he or she may receive an “automatic stay,” which is a court order preventing any lender from collecting on an existing debt until a payment plan has been entered by the court.
If one files for Chapter 7 Bankruptcy, he or she faces the possibility of losing certain assets in the liquidation process. With Chapter 13 Bankruptcy, a debtor is able to retain ownership over possessions and does not face liquidation.
Chapter 13 bankruptcy can ensure that a person keeps his or her car and is not forced to make a lump sum payment to satisfy any outstanding debt.
Chapter 13 Bankruptcy also gives a debtor more time to repay unpaid taxes or resolve other tax issues with the IRS.
Chapter 13 bankruptcy offers a more flexible debt resolution process than Chapter 7 Bankruptcy. Chapter 13 Bankruptcy can help a debtor to get back on his or her feet without experiencing the harsh liquidation effects of a Chapter 7 Bankruptcy. Chapter 13 bankruptcy also helps debtors obtain more control over their finances through a payment plan. Upon successfully making all payments in the plan, a debtor’s remaining debts may be discharged.