Life is so uncertain, and some events that take place can really devastate a person's finances. If you recently went through a hard situation that left you extremely behind on your bills, you could consider bankruptcy. If one of your top concerns is losing your home or car, Chapter 13 bankruptcy could be the solution you need to prevent this from happening. Here is an explanation of how this branch of bankruptcy helps people from losing their major assets.

Chapter 13 Involves Repaying Debts

Using Chapter 13 bankruptcy will require repaying the debts you owe; however, it also offers the ability to stop a foreclosure or repossession, even if the lenders already started the procedures. Chapter 13 stops you from losing your car or house by offering you a plan and time to repay these debts in full.

In your Chapter 13 plan, your lawyer will scour through your finances with a fine-tooth comb to determine how to create a repayment plan that will work for you. When finished, the plan will involve making payments to the trustee responsible for your case, and the trustee will pay your debts according to your plan.

The plan will include paying all the payments that come due for your house, car, and other bills over the next three to five years, and it will also include paying off the arrears you owe. When you complete the repayment plan, you should no longer have any past-due balances on your house, car, or other debts. All your debts should be current, and this is how Chapter 13 offers a fresh start.

Chapter 13 Stops Creditors From Contacting You

Because you will repay all your debts in Chapter 13, the bankruptcy law requires lenders to stop pursuing collections, foreclosures, and repossessions once you file under this branch of law. Lawyers and trustees call this an automatic stay, and this is one of the top benefits offered through both Chapter 13 and Chapter 7.

When the court issues the automatic stay, your lenders cannot ask you for the money you owe. They cannot continue pursuing foreclosure or repossession. They cannot communicate with you at all. This will provide relief to you, but it will also provide a way for you to keep your house and car.

If you decided to use Chapter 7 instead of Chapter 13, you would still receive the automatic stay; however, you would not have a way to keep your house and car if you are not current on your payments. Chapter 7 offers a much shorter automatic stay and does not require a repayment plan. Because of this, you will not have a way to catch up on past-due payments, and your lenders could pursue foreclosure or repossession as soon as the automatic stay ends. The automatic stay in Chapter 13 lasts until you complete the entire repayment plan.

Chapter 13 Protects Your Assets

The other important thing you should understand is that one key purpose of Chapter 13 is to offer a way for people to protect their assets. When filing Chapter 7, the trustee has the right to seize a person's assets as a way of liquidating the person's estate. Seizing of assets does not occur in Chapter 13, and this is primarily because Chapter 13 offers a way for a person to repay the assets he or she has for the sole purpose of allowing him or her to keep the assets.

If you want to save your home or car and are behind on payments, Chapter 13 bankruptcy could help. To learn more about this branch and what it involves, contact a bankruptcy law attorney like Charles J Schneider PC.