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Knowing what to expect with Chapter 13 bankruptcy

Filing for bankruptcy is rarely a decision that is made lightly. In fact, someone who is struggling with overwhelming debt because of a divorce, medical expenses or other financial setback may have tried many other options to regain financial footing before deciding to investigate bankruptcy. Some in Connecticut may seek Chapter 7, which discharges some (and sometimes all) debts through the liquidation of nonexempt assets. However, those who have a steady income or otherwise do not qualify for this type of debt relief may find Chapter 13 works for them.

The unfortunate truth is that about two thirds of those who begin the process of bankruptcy through Chapter 13 do not finish and may find themselves in a worse situation than when they began. However, in many cases, this is because they did not fully understand what was expected of them during the process. In Chapter 13, the filer must propose for court approval a plan to repay certain debts through a bankruptcy trustee. The filer makes monthly payments to the trustee who distributes the payments to creditors according to the court-approved debt reorganization plan.

Perhaps the most difficult part of the process is that it takes time, between three and five years. Some people find it frustrating to maintain a tight budget for that length of time and ultimately do not finish. Additionally, any debts that are not included in the bankruptcy -- such as student loans or child support -- still must be paid as usual. However, those who complete the entire plan are often gratified to have the remaining unsecured debt discharged.

Those who are suffering under the weight of mounting debt likely have many questions and concerns. Bringing those questions to a dedicated and compassionate attorney is often a step in the right direction. A Connecticut attorney can evaluate one's financial situation and help determine if Chapter 13 is the best option for debt relief.

Source: thebalance.com, "The Reality of Life During a Chapter 13 Case, Part 1", Carron Armstrong, Accessed on Aug. 18, 2017

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