As discussed previously in this blog, when Colorado residents get deep into debt, they likely are looking for effective options to get rid of the debt. Many may consider bankruptcy to be the most effective option for solving their debt problems. However, others can be worried about losing their assets during bankruptcy, as a person's assets are often liquidated in order to pay off what debt can be paid. This is particularly true for those individuals who believe they have enough income to pay off some of their debt.
For these individuals, Chapter 13 bankruptcy may be a more effective option toward debt relief. Unlike Chapter 7, which liquidates a person's assets to pay off debt, Chapter 13 bankruptcy allows a person to hold on to certain property they might have had to give up in Chapter 7. This is because Chapter 13 is typically used by individuals who have income that is too high to qualify for Chapter 7, and therefore these individuals can use that income to pay down their debt, instead of having to liquidate their assets.
Chapter 13 works by creating a repayment plan that lasts between three and five years. During this time, individuals will make manageable payments on their debt, while creditors will be restricted from harassing the person to collect on the debt or garnishing their wages. After this process, a person's credit card bills and other debt may be reduced by 90 percent or more.
At our firm, we have prepared many Chapter 13 bankruptcy petitions and proposed plans for debt repayment on behalf of Colorado residents. We understand how bankruptcy laws work, including the advantages and disadvantages of filing for Chapter 13 instead of Chapter 7. For more information and to set up a consultation with our bankruptcy attorneys, please visit our Chapter 13 page.