Chapter 13 bankruptcy isn't liquidation bankruptcy, and it's not likely what you think of when you consider bankruptcy as an option. Chapter 13 bankruptcy is a way to consolidate your debts and to pay them down over a three-to-five-year period.
Chapter 13 bankruptcy doesn't always make you repay all you owe, but it does require on-time payments for a number of years. After you complete the Chapter 13 bankruptcy, the creditors won't be able to seek full payment for any debts you settled for less.
Are there benefits to Chapter 13 bankruptcy?
The bankruptcy itself may not hurt your credit much if you're already behind on payments, and that's a good place to start. Instead, it'll give you a chance to rebuild your credit, even though it stays on your record for a number of years.
Chapter 13 bankruptcy also has you pay down your debts over time, which helps you show that you did intend to make payments. This could help when you're trying to get credit in the future.
How much debt can the courts forgive?
There is a potentially unlimited amount of forgiveness for debts available through the court, with a few exceptions. Student loan debts, tax debts and child support or alimony are usually not able to be discharged through bankruptcy. Unsecured debts, which include things like credit cards and car loans, may be discharged, depending on the specifics of the case.
Bankruptcy can help you get back on your feet and build a better, more stable financial foundation. Our site has more information on what you can do to help yourself get out of debt.