No one likes the idea of being unable to honor debt obligations. When life chances like the loss of a job or an extended illness make it impossible to remain current with the bills, some sort of action must be taken. This where considering the idea of filing for a Chapter 13 in Lawrence KS makes a lot of sense. How Does a Chapter 13 Bankruptcy Work? While many people are familiar with the concept of a Chapter 7 bankruptcy action, not everyone understands how a Chapter 13 in Lawrence KS works. With this form of bankruptcy, the debtor is placed under the protection of the court. This effectively brings to an end any collection calls that creditors are currently making, and also prevents any further legal action on their part.
As part of the arrangement, the court will verify the balances due to each creditor, then prepare a repayment schedule that is in line with the amount of income that the debtor generates. One the plan is approved by the court, the income of the debtor is garnished and funds forwarded to the court each pay period. The court then distributes those funds to the creditors based on the terms of the repayment plan. After all the debts are settled in full, the garnishment is rescinded and the bankruptcy is considered complete. Who Would Choose This Approach? The laws that apply to Chapter 7 bankruptcies typically include proof that the debtor does not have the means to repay the amounts owed to creditors.
With a Chapter 13, there is enough income to repay those debts eventually. For people who are capable of holding down jobs and generating the money needed, this approach works very well. As an additional benefit, they have the comfort of knowing that they were able to eventually repay their debts, although it took longer than they had originally anticipated. For many people, a Chapter 13 bankruptcy provides the chance to get back on an even financial keel. Once the debts are discharged in full, it is possible to begin repairing the credit rating and hopefully never need help with debts again. Click Here and learn more about this form of bankruptcy and how it can help people put their lives back together.