Should you file bankruptcy? Part 4
For some people with money problems, bankruptcy may be the best option to protect their property and deal with the debts that have become unmanageable.
Many people file for relief under the Bankruptcy Code to seek protection from their creditors and to deal with debts that have become unmanageable. Sometimes, a Chapter 7 is not the best option to protect property. Another option for individuals seeking bankruptcy relief is to file under chapter 13.
The chapter 13 debtor files and makes regular payments according to a plan that addresses the treatment of the debts. They make payments into a trust fund managed by a chapter 13 trustee. The trustee then distributes the payments according to the plan. Some creditors may be paid in full; others may be paid in part, and the debtor may be relieved of personal liability for some of the debt.
Creditors have the opportunity to object to the proposed plan, and any objections must be resolved before the court will confirm the plan. Finally, the debtor must complete the plan in order to receive most of the benefits of a chapter 13. A successful chapter 13 plan is usually completed in 3 to 5 years (the length of the plan is determined by a number of factors and requirements). Some debtors choose chapter 13 in order to protect property that would otherwise be vulnerable in a chapter 7.
I have worked with numerous people over the years who have told me that they would not have been able to save their home, for example, if they had not filed for bankruptcy protection. So, the claims made in some bankruptcy advertising to “stop foreclosure” may be true, but completing a successful chapter 13 takes time and effort. Therefore, should you file bankruptcy? For some people with money problems, bankruptcy may be the best option to protect their property and deal with the debts that have become unmanageable. I urge anyone considering filing bankruptcy to seek the advice of an experienced attorney who regularly practices in the bankruptcy court.
For those of you with money problems, Michigan State University Extension offers a variety of money management programs throughout the state of Michigan, check out MI Money Health for more information.
Other articles in this series:
- Should you file bankruptcy? Part 1
- Should you file bankruptcy? Part 2
- Should you file bankruptcy? Part 3