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Reorganize your debt with Chapter 13 bankruptcy

Residents of Washington D.C. have two primary options when it comes to bankruptcy. They may opt for Chapter 7, or for Chapter 13. The latter puts emphasis on the reorganization of debt rather than debt removal or collecting collateral.

On the plus side, choosing Chapter 13 bankruptcy means that you will usually be able to keep most of your property. The United States Courts dubs it a wage earner’s plan, due to the fact that the success of Chapter 13 bankruptcy is reliant on the participant being able to eventually pay back their debt, rather than needing to give collateral like property in exchange. Some of the debts that must be repaid are called priority debts. This includes things like child support or taxes, and they will need to be handled first. Late payments, home payments and car payments are lesser debts but must also be included.

Where does the reorganization part come in? That’s the primary hurdle of Chapter 13 bankruptcy. Findlaw shows that a person filing for this type of bankruptcy needs to have a repayment plan written out and detailed meticulously. Usually this plan will be designed to take place over a period of 3-5 years. By the end, the person in debt is supposed to have been able to repay all of the money they owe, having broken it down into more manageable payment chunks.

This type of bankruptcy plan is a little more restrictive than others due to the fact that it requires the person to pay things back. However, its benefits tend to make it worth looking into for those who are qualified.

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