In 2011 there were nearly one million applications for bankruptcy protection. Yet the notion persists that bankruptcy is an embarrassing process that will ruin any opportunity for financial well-being.
Chapter 13 bankruptcy, often called the “wage-earner plan” or “repayment plan”, enables a debtor to repay some unsecured debt (such as credit cards and medical bills) while retaining their secured assets (such as your home and your car). The typical Chapter 13 debtor (the person or persons filing the voluntary petition) has the ability to pay all the moneylenders. But the debtor has temporarily fallen behind on installment payments and, as a result, the moneylender is threatening foreclosure or repossession or some similar action.
The moment the voluntary petition is filed, the court imposes a complete stop on any and all collection activity.
The Chapter 13 Trustee
Next, a bankruptcy trustee basically puts the debtor on an allowance for three to five years. After allocating money for necessities, any disposable income is divided among the debtor’s unsecured creditors (e.g. credit card companies and payday lenders). At the end of three to five years, any remaining unsecured debt will be discharged.
You probably have many more questions, and the bankruptcy professionals at Henley and Henley have all the answers. Call today for your free initial consultation.