Many people hear about businesses filing for Chapter 11 bankruptcy, which allows them to reorganize and pay their debts over time. Many businesses can survive serious financial problems this way without having to close down. The government offers individuals a similar program, known as Chapter 13. They can file for Chapter 13 bankruptcy with the assistance of a lawyer like Joseph I Wittman Attorney at Law in Lawrence KS.
Chapter 13 vs. Chapter 11
Individuals are allowed to file for Chapter 11, but they usually don’t because there is a great deal more work involved, making the legal fees significantly more expensive. The main reason they would do so is because that they have too much debt to qualify for Chapter 13. Individuals filing Chapter 11 usually have had a relatively large amount of wealth at some point but now cannot afford to pay their outstanding financial obligations.
Paying Back Obligations
By filing Chapter 13 through a lawyer such as Joseph I Wittman Attorney at Law in Lawrence KS, the person has the chance to pay back all or most of the debt owed. Liquidating assets is not required, as is the case with Chapter 7. The person must have enough income to stay on track with a payment plan managed by a trustee. Visit the website to learn more about this particular lawyer.
Examples of Debts Included
Chapter 13 can include numerous types of unsecured and secured debt as long as the person can afford to make the monthly payments, which wrap up within three to five years. Back mortgage payments can be distributed through that time frame, for example, allowing homeowners to catch up and avoid foreclosure. Minimum payments demanded by credit card companies no longer apply. Smaller amounts can be included as monthly contributions to the plan.
This type of program is not always an easy road. The person considering filing must look at the situation clearly and make sure the payments can be made every month, or default will occur and it’s back to square one. Determination and sound financial actions are key to success.