What is Chapter 13 Bankruptcy?

Would you be able to repay your creditors if you had more time?

Chapter 13 Bankruptcy is sometimes referred to as a reorganization bankruptcy. Many people file Chapter 13 to stop foreclosure or to catch up on their debt.

Over the course of 3 to 5 years, Chapter 13 bankruptcy filers will have the opportunity to repay their creditors. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep, such as a home.

If you do not have a sustainable income, chances are that you will be ineligible to file Chapter 13 bankruptcy.

What Are The Advantages of Filing Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows you to reorganize your finances by consolidating your debts into one monthly payment.

Unlike debt consolidation services, Chapter 13 has the power of the Federal Bankruptcy Code behind it, providing many advantages for people seeking debt relief, such as:

  • it often stops the foreclosure process
  • creditors are prohibited from contacting you after you file
  • you may get some unsecured debts total forgiven if you stick to the repayment plan

The Bankruptcy Automatic Stay – Stop Foreclosure

When you file Chapter 13 bankruptcy, the automatic stay provides immediate protection from creditors.

The automatic stay is a Bankruptcy Court injunction that prevents almost all collection activity against you. The stay has the power to stop foreclosure, repossessions, garnishments, license suspensions, and creditor harassment.

Free Chapter 13 Bankruptcy Evaluation

Ask an attorney, for free, if you can/should file Chapter 13 :

Chapter 13 Usually Reduces Total Amount of Debt

Subject to qualifications, A Chapter 13 bankruptcy will allow you to pay as little as 10% of the unsecured debt back and eliminate the other 90%.

Your reduction in principal owed allows you to pay your debts off more quickly that you could through other consolidation plans that lack the power to dictate what the creditors are entitled to be paid.

Upon filing Chapter 13, any debt in existence prior to the filing does not accrue any more late fees, and usually will be repaid interest-free.

All of the money you pay toward your unsecured debt will be applied toward principal drastically reducing the amount of time it takes you to repay a debt.

Bankruptcy Attorney Working for Your Best Interests

A Chapter 13 bankruptcy attorney has a legal and ethical obligation to represent your best interests.

Your attorney’s compliance with his obligations to you are regulated by state law. Thus, when filing Chapter 13 bankruptcy, you have the opportunity to have a bankruptcy attorney represent only your interests and you are ensured that your attorney is fighting for your rights.

Priority Debts Are Paid First in Chapter 13

A Chapter 13 bankruptcy plan pays off most secured loans first and delays payment of unsecured debts.

The majority of the initial Chapter 13 payments can be applied towards mortgage and automobile payment defaults. Credit cards and medical bills can be paid after these secured and other priority claims have been paid off.

Filing for bankruptcy may be the most responsible way to remove the pressure from financial debt without losing everything.

Many businesses need to file for bankruptcy at some point, although this is never something that is desired.

Speaking with a bankruptcy attorney when deciding about filing bankruptcy, can ensure that you’re taking the best route possible. If you’re facing foreclosure or just can’t meet your monthly bills, bankruptcy might be your solution.