Understanding Chapter 13

: Chris Lee Law Firm

  Filed under: Chapter 13

The Fort Worth bankruptcy process can be intimidating. Often, debtors don’t know which type of bankruptcy is best or whether filing is the best decision for them. Getting to know the process is the first step to making a life changing decision for a stable financial future.

The Basics

The difference between Chapter 13 and Chapter 7 bankruptcy comes down to how debts are resolved. In Chapter 13, debts are repaid over a period of three to five years. Spreading out the payments over a longer duration allows for smaller monthly payments, which are more affordable to the debtor. The amount that is required to be repaid each month in Chapter 13 is based on the debtor’s financial situation. Income and assets are used to evaluate the ability to repay, generally an amount that factors well into a debtor’s disposable income.

Many people ask, why repaying debts over several years is a better financial solution than having debts satisfied in a Chapter 7 liquidation bankruptcy? For some people, it may not be the best solution. For others, debt repayment through Chapter 13 is an affordable way to resolve debts while protecting secured debt assets and reducing challenges for obtaining future credit.

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