Bankruptcy can be an emotionally fraught and financially stressful situation for those from Louisiana to find themselves in. It can be especially frustrating for people to even know which type of bankruptcy case to file, considering the many different options available. Often, people opt for one of the more commonly known styles of bankruptcy, such as Chapter 7 or Chapter 11, without knowing of the advantages possible under Chapter 13 bankruptcy. Those in financial distress can benefit from Chapter 13 filings if they meet the necessary standards. The Administrative Office of the United States Courts outlines the specific requirements, such as eligibility, how to put together a plan, the way a confirmation hearing works and the parameters of discharge.
Individual people, no matter whether they are self-employed or running unincorporated businesses, can apply for Chapter 13 bankruptcy. According to Forbes, there are three debt categories that fall under Chapter 13:
- Secured debt, such as collateral which could be repossessed
- Unsecured debt, such as medical bills and debts from credit cards
- Priority debt, such as child support payments, taxes and student loans
Each type of debt has different requirements based on its individual definition. Priority debts will likely be needed to be fully paid, while unsecured debts could be forgiven.
One reason many individuals choose not to file for Chapter 13 bankruptcy is that it can take much longer to resolve than other chapters, usually three to five years. However, it is only listed on a credit report for seven years, while other chapters can stay for a decade or more. The financial situation of each person is unique. Therefore, careful analysis of the time and requirements of Chapter 13 can assist in making a strong financial decision for the future.
