Debts can cause a great deal of stress and financial difficulty for a family, but bankruptcy can offer a way out of these situations. However, anyone who is considering bankruptcy may wonder how different types of debts will be handled and whether filing for bankruptcy could result in the loss of his or her property. The elimination of secured debts, such as a home mortgage or auto loan, will typically lead the lender to pursue foreclosure or repossess the collateral used to secure the debts. To avoid this, a debtor may need to determine how they will be able to become current on his or her payments while eliminating other debts.
For debtors with secured debts, Chapter 13 bankruptcy is often the preferred option. This type of bankruptcy will require a person to make ongoing payments toward a repayment plan for several years, and if he or she can continue making payments toward secured debts, he or she will be able to retain ownership of his or her property. Missed payments, late fees, and other amounts owed to a lender may be included in a repayment plan, which will allow a person to become current on these loans. Chapter 13 offers some other benefits as well that may reduce the amount of a person’s debts and help him or her maintain financial stability in the future.
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