Depending on a person or couple’s situation, Chapter 13 bankruptcy may be a good financial decision for them to make. Instead of choosing the more common liquidation offered with Chapter 7 bankruptcy, Chapter 13 provides debtors with an opportunity to repay some or all of their debts. This has some serious advantages to other types of filings.
The Oregon State Bar states that when debtors choose a Chapter 13 bankruptcy, they are able to examine their ability to pay their debts and make a plan in which they pay as many of those debts as possible over a specific period of time. This is all done under the direction and with the permission of the court. According to the United States Courts, one of the most notable advantages that this type of repayment plan offers is that it may allow debtors to keep their homes out of foreclosure. While they would still be required to meet all financial obligations during the repayment plan, this may be enough to keep many families in their homes.
Another advantage this type of plan offers is for third parties. Many people who run into financial trouble often turn to cosigners, who then share liability for a debt even though they may not reap the benefits of that debt. Chapter 13 law has special provisions that protect these cosigners during the length of the repayment plan.
Perhaps one of the greatest benefits that debtors see when choosing Chapter 13 bankruptcy is in the form the repayment plan takes. This type of bankruptcy is very similar to a debt consolidation loan, making it easier for debtors to pay their bills and get out of debt. This is because all debts are paid to a trustee with a single payment for each period during the plan. The trustee then pays the individual creditors what they are due, simplifying what once could have been a stress-inducing experience for those who are deeply in debt.