Chapter 13 bankruptcy is a bankruptcy in which you restructure your debts and get put onto a payment plan so you pay back your debts in a way that you can afford. Chapter 13 bankruptcy typically takes three to five years to complete and stays on your credit report for 7 years. Read on for other information about chapter 13 bankruptcy.
What Is Restructuring?
Restructuring your debts is when the bankruptcy trustee looks over your debts and your assets to see what you can sell in order to pay back your debts. They also will negotiate with the creditors to pay back your debts on a payment plan that works for your budget. Your debts are paid back to the creditors, but on a new timeline. During this time, your creditors cannot send you any bills or come after you throughout the bankruptcy, unless you default on your payments or you don't pay follow the trustee's plan.
Will You Have To Pay Back Everything?
Everything is included in your bankruptcy, but not everything is paid back in full. Some things may not be paid back, as the trustee may negotiate with these creditors to pay back less to them. The bankruptcy trustee will negotiate with your creditors, and interest may stop accumulating on your debts so you can pay them back easier.
Will You Have Money To Spend?
The bankruptcy trustee will tell you an amount of money that you will have to pay to the trustee each month. This money is then divided amongst your creditors and the money is sent off to them by the bankruptcy court. This amount of money is based on how much money you make and how much debt you have. You will be left with some money each month, as spending money and entertainment money is figured into this budget. You will have to budget this money accordingly, though.
Chapter 13 bankruptcy is a bankruptcy option where you pay back your debts using an affordable payment plan. You have to follow through with the plan for the entire duration of the bankruptcy, or you risk having your bankruptcy dismissed and your creditors coming after you for your debts. If you are struggling with your debt and need a way out, chapter 13 bankruptcy may be the right way for you. Make an appointment with an attorney to discuss bankruptcy and get out of debt.