Many Colorado business owners understand the importance of making sound business decisions. These decisions can sometimes be very difficult to make, especially on an emotional level, but they make the most financial sense. The same is true in a person's individual life, as a decision that, while emotionally tough, may be the best decision from a financial standpoint.
One of the best examples of this is filing for bankruptcy. While bankruptcy can be a difficult decision for a person to make, it may also be the best chance the person has for attaining debt relief.
In Chapter 13 bankruptcy, also known as reorganization bankruptcy, individuals can create a repayment plan that allows them to repay the debts they owe to creditors. Accordingly, it is different from other types of bankruptcy, such as Chapter 7, because the person will repay at least a portion of their debts under the plan, but in a different way, provided they are eligible.
The Chapter 13 repayment plan will specify in detail how much debt will have to be repaid to the various creditors. Some debts, called priority debts, will be paid off first, on items like taxes and child support. Secured debts, such as a home or car loan, will also be described by the plan. Finally, any amount of disposable income to person has left may be applied toward unsecured debts.
While the length of a person's repayment plan may vary slightly, typically the plan will last three to five years. Of course, if the person's debts are paid off before that time, then the process will end.
Source: KTRE, "Hotel Fredonia owner: bankruptcy not an easy choice," Donna McCollum, Dec. 16, 2013