Chapter 13 Bankruptcy is one option available to debtors who are looking to escape from personal debt. The main difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 requires you to liquidate some of your assets to pay off your debts, while under Chapter 13 you use your income to pay back your debts. If you have the income to afford Chapter 13, it may be the better option because it gives you more freedom throughout the bankruptcy process and allows you to pay back debts without selling your property.
When you file for Chapter 13 bankruptcy, you must also file a plan for repayment. You must outline the fixed amounts that you plan to pay to creditors on either a biweekly or monthly basis. Typically the repayment period will last between 3 years and 5 years, with all debts paid back by the end of the repayment plan. Once you have filed for bankruptcy, you have 30 to 45 days to begin paying back your creditors. It is therefore important for you to have a steady source of income if you wish to file for Chapter 13.
A bankruptcy lawyer can help you develop your repayment plan to submit with your petition for Chapter 13 bankruptcy. Keep in mind that when you draft a repayment plan, you do not need approval from creditors to have the plan approved. You simply need the approval of the court.
Some things to consider are: how quickly you want to pay back your debts, how quickly you can afford to pay back your debts, how frequently you can make significant payments, and how much of your income you can set aside each period to pay to creditors. Your lawyer can help you answer these questions to help you develop the best repayment plan for your needs.