Ohio residents who are considering filing for bankruptcy may also be wondering which type of bankruptcy will work best for them. Chapter 13 has many benefits, but it tends to work better for a certain set of people.
The United States Courts lists out the bankruptcy basics for Chapter 13. Known colloquially as a “wage earner’s plan”, this plan is ideal for people who are in a financial situation where they can make payments toward their debt. Debt is reorganized so that it is easier to pay off, but ultimately, it will be paid off. This differs from Chapter 7, in which items are liquidated in order to allow the individual to discard some of their debt.
FindLaw looks at the benefits of Chapter 13, which primarily involves being able to avoid foreclosure and avoid the same amount of damage to one’s credit score that would occur with Chapter 7 bankruptcy. It will remain on a person’s credit report for a shorter amount of time. Additionally, the individual won’t have to liquidate any of their assets. This can be important for people who don’t want – or cannot afford – to give away a car, property, or other items.
Chapter 13 is most beneficial for individuals who have a steady source of income. With this, it is easier to come up with a repayment plan that can reliably be followed. Without steady income, it may be hard to make the payments on time. Unfortunately, Chapter 13 is not forgiving in this sense and if a person goes this route they absolutely must be able to make their payments.