Chapter 13 bankruptcy is a type of reorganization bankruptcy that allows individuals with regular income to repay their debts over a period of 3 to 5 years. Some of the main reasons to file Chapter 13 bankruptcy include:
- To keep your home: If you are facing foreclosure and are behind on mortgage payments, Chapter 13 bankruptcy can allow you to catch up on those payments over the course of the repayment plan.
- To protect co-signers: If you have co-signed on a loan for someone else and are unable to repay it, filing for Chapter 13 bankruptcy can protect your co-signer from collection actions.
- To pay off debts over time: Chapter 13 bankruptcy provides a structured repayment plan that allows you to pay off some or all of your debts over a period of 3 to 5 years. This can be a more manageable option than trying to pay off all of your debts at once.
- To protect assets: In some cases, Chapter 13 bankruptcy can allow you to keep assets that you would have had to liquidate in a Chapter 7 bankruptcy, such as a second home or a valuable car.
- To discharge certain debts: While Chapter 13 bankruptcy does not discharge all debts, it can discharge some debts that are not dischargeable in a Chapter 7 bankruptcy, such as certain tax debts and student loans.
It’s important to note that Chapter 13 bankruptcy is not the right option for everyone, and it’s important to consult with a bankruptcy attorney to determine if it is the best option for your specific financial situation.