Hopefully you have read our prior blog discussing the various benefits of filing a Chapter 7 bankruptcy case. This blog will focus on the advantages of a Chapter 13 bankruptcy.
In most instances, filing a Chapter 13 provides you more flexibility in restructuring your debt and the following benefits:
- Automatic stay. As soon as you file a bankruptcy case, the automatic stay is effective. It prohibits creditors from taking any collection actions against you while your bankruptcy is active. The stay halts all collection calls, lawsuits and garnishments.
- Debt consolidation. Your Chapter 13 plan allows you to reorganize your debt and consolidate it into one monthly payment that you make to the trustee, who then disburses the funds to your creditors as set forth in the terms of your plan.
- Elimination of debt. Your unsecured debt, such as credit cards and medical bills, is paid a percentage of what is owed under your repayment plan. The percentage depends on your income and debt, but most debtors pay pennies on the dollar owed, if anything at all.
- Cure delinquencies. If you have fallen behind on your mortgage loan payments or your vehicle loan payments, you can include small payments in your Chapter 13 plan to be applied to curing your delinquencies. A Chapter 13 case lasts three to five years, which typically gives you plenty of time to cure your payment defaults and get your secured loan back on track.
- Lien stripping of inferior mortgages. If you have a second or third mortgage on your home, you may be able to “strip” the lien and treat it as an unsecured debt. To qualify, the value of your home must be less than what is owed on the first mortgage. To learn more about lien stripping, please read out blog titled “Stripping Off Junior Mortgages in Bankruptcy.”
Speak with an experienced Chapter 13 Bankruptcy Attorney at Faro & Crowder, PA
The above are just a few examples of the benefits offered by filing a Chapter 13 case. If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment.
The information on this blog or any blog is not intended as, and should not be taken as, legal advice.