Even as the nation’s economy continues to be strong according to financial experts, there are many people in Indiana who simultaneously continue to experience financial struggles. Extremely high and unexpected health care expenses, job losses and divorce are just a few things that a person might experience which could put them in the position of needing debt relief. For some, the best assistance comes in the form of a personal bankruptcy.
There are two primary forms of consumer bankruptcy. Perhaps the most well-known version is Chapter 7. As Experian explains, in this type of plans, all debts in the bankruptcy are forgiven and the person does not pay anything to creditors.
In contrast, a person who files for Chapter 13 does in fact pay some of the debt that they owe. According to the United States Courts, a Chapter 13 bankruptcy plan is essentially a type of structured debt repayment. A plan can be setup to last 36 months on the short end to 60 months on the long end.
During this window, a debtor is required to make payments every month to a trustee. The trustee in turn distributes money to creditors. The amount of money paid to each creditor is agreed upon at the outset of the plan. People who own homes or other assets that they want to keep may find a Chapter 13 bankruptcy preferable to a Chapter 7 plan. There are, however, income requirements with a Chapter 13 plan to ensure that a consumer has sufficient income with which to make the payments every month.