When many people think about bankruptcy, they automatically think about Chapter 7 bankruptcy. This is a type of bankruptcy used for people who are likely never going to have the financial resources to pay off the debt that they owe. They will use it to liquidate their non-exempt assets. The money created through this liquidation can then be used to pay off a portion of the debt, while the rest will be eliminated or forgiven.
However, this is certainly not the only type of bankruptcy people can use, and there are many people who make too much money to qualify for Chapter 7. Instead, they may want to use Chapter 13 bankruptcy, which is often referred to as a wage earner’s plan. How is this different?
It makes the debt more affordable with a repayment plan
Chapter 13 is different because it consolidates the debt that you still have into a repayment plan. You only have to pay on this once every month, and it is set up for around 3 to 5 years, in most cases. Once you make all of those payments, you have resolved the debt.
This is done because those who are still earning a wage may be able to pay off their debt, but they simply cannot pay it all at the same time. By allowing them to re-organize that debt, it makes it affordable again. This is just a different way of getting the same fresh financial start that someone may have been looking for when they began the bankruptcy process.
If you’re thinking about bankruptcy yourself, be sure you know exactly what options you have and how to utilize them. Call Quinn Law Firm today at 814-833-2222.