If you’ve considered bankruptcy to seek relief from high debts, you may feel unsure about how to file. You don’t want to have to sell all your assets to pay off creditors. You may worry that a court will make you give up all your possessions.

However, different types of bankruptcy give you different advantages. If you don’t want to liquidate your assets in a Chapter 7 filing, you may be able to use Chapter 13. Depending on your situation, you may choose this type to help you escape your debt.

How does Chapter 13 work?

With a Chapter 13 bankruptcy, you work with the court to create a three-to-five-year repayment plan. The judge orders an automatic stay against your creditors, blocking them from trying to collect during the process. Then all your debts go into one payment plan through the court. You get the chance to pay off most of your debt and keep your assets.

Is Chapter 13 right for you?

If you have a steady income, you may not qualify for a Chapter 7 bankruptcy. To use a Chapter 7, you must first pass a means test. This test measures the difference between your income and your debts. If you earn too much, a court won’t discharge the debt in Chapter 7. But you can still use Chapter 13 to seek relief.

You may also choose to use Chapter 13 if you don’t want to lose your assets. You may not want to lose your family’s home, cars or extra assets. Or if you have a lot of equity in your house or multiple properties, you don’t want to lose them to liquidation. With Chapter 13, you may be able to keep your property

What are the disadvantages of a Chapter 13 bankruptcy?

While you can get relief with a Chapter 13 bankruptcy, you will have to spend multiple years paying off your debt. The judge will decide how much money you need to buy your basic necessities. The rest of your income goes towards your repayment plan.

Chapter 13 also relies on you having a steady income. If you lose your job during the process, you won’t have income for the repayment plan. If you can’t make the payments, a judge may dismiss the bankruptcy. This action removes the protection of the automatic stay and lets your creditors try to collect your debt.

Chapter 13 can help you keep your assets

A Chapter 13 bankruptcy is one way you can seek relief from your high debts. While it will take you time to complete it, you can keep your assets. If you don’t want to lose your property, you may consider using a Chapter 13 bankruptcy to help you.