How does Chapter 13 bankruptcy work?

 Posted on August 05,2021 in Bankruptcy

There are many unexpected events that occur throughout people's lives in Illinois. Some of these unexpected events can be pleasant surprises and benefit people. This is not always true though. Some of the unexpected events can create hardships for people. It could be a car breaking down or appliances breaking down. People may be involved in an accident and suffered injuries or developed an illness or disease. They may have close family members suffer sever injuries and illnesses that require extra care or many other types of unexpected events.

The unexpected events that cause hardships also tend to be costly financially as well. It cost money to repair or replace things that break down. When people suffer injuries or illnesses people may incur medical bills which can add up quickly. If they lose a job, they lose income. When people incur these extra expenses, it can cause them to fall behind on monthly obligations and people may need to turn to credit cards to keep up and before they know it they may be overwhelmed with debt.

Basics of Chapter 13 bankruptcy

It may not seem like people may ever be able to rid themselves of the debt, but people do have options. One of those options is Chapter 13 bankruptcy. This option is mainly for people who want to keep their property after the divorce and also have the ability to make payments towards their debt. Unlike Chapter 7 bankruptcy, people do not need to liquidate assets.

When people start this process most collection attempts and creditor harassment stops as well as foreclosure proceedings. People need to create a repayment plan where the debts are consolidated and people make payments to a trustee who manages the repayment plan. Once people complete the repayment plan, the remaining debt could be discharged.

There are many people in Illinois who find themselves with overwhelming debt. People in this situation may be able to start a Chapter 13 bankruptcy action to eventually rid themselves of the debt. This process is not appropriate for everyone though and consulting with experienced attorneys who understand the process could be beneficial.