Facing the possibility of bankruptcy can be a scary experience both from financial and emotional perspectives. If you are considering the need to file for bankruptcy, the following information regarding Pennsylvania law may provide you with some insight into the process and the next steps you may decide to take.
Chapter 13 bankruptcy overview
Designed to give you a fresh start and help you create a manageable way to pay off a portion if not all of your debt, bankruptcy can be a way to reclaim financial freedom. To request this bankruptcy option, the courts require submission of a debt repayment plan that will pay off a significant portion of your debts within a three-to-five-year time frame.
Types of debt
There are several types of debt you will need to consider when drafting your repayment plan to submit to the court system for debt relief assistance. The types of debt include the following:
- Priority debts are any debts that you have to pay before the end of your bankruptcy repayment period. These types of debts can vary from child support payments to any money owed to the government for taxes.
- Secured debts are ones in which there is collateral attached, such as a car or property. Depending on the type of debt and the owner of the debt, you may have to pay off the full value of these items during your bankruptcy period.
- Unsecured debts are those that do not have any collateral attached to them. These kinds of debt typically include personal loans and credit cards. This kind of debt is the least important in terms of repayment, and many times, the creditors will only be repaid a portion of their money.
The bankruptcy process is complex and requires that you consider many options. However, if you are in need of a new financial beginning, filing for bankruptcy may help you toward a path of future financial stability.