Those exploring the option of filing bankruptcy may worry about the stigma associated with it. Some others may also see it as “giving up,” which is not the case. Still, others may not understand how it works or worry about paying the filing fees. Nevertheless, there are many strategic reasons for filing Chapter 13 bankruptcy, which allows the filer to restructure the debt with a repayment plan spread over three to five years. After that time, much of the remaining debt will be discharged.
Strategic benefits for filing Chapter 13
There are many pluses to filing, but some vital Chapter 13 bankruptcy (also known as “the wage earner’s plan”) benefits include:
- No limit on income: While Chapter 7 is for those with below-average income here in Florida, the government designed Chapter 13 for folks who have jobs in middle and upper-income brackets but accumulated an unsustainable amount of debt. The maximum amount of debt allowed changes to reflect the cost of living and inflation.
- Filers can keep assets: Instead of liquidation, individuals and families can often keep their homes, cars and other significant possessions accumulated over a lifetime.
- Filers pay their debts: Debt often spins out of control due to interest rates. Many can take solace in knowing that they are repaying the principal owed and not the predatory fees and interest rates (which is unsecured debt discharged at the end of the bankruptcy).
It also allows filers to regain control of their lives
There will be challenges and sacrifices after filing bankruptcy, but those who file often come to realize that Chapter 13 provides a smart and strategic option for getting out of debt and taking control of their lives.