Chapter 13 Bankruptcy
Chapter 13 Bankruptcy can save your house and other property
If you find yourself falling behind on a secured debt payment, such as a mortgage or car loan, a Chapter 13 bankruptcy may help you catch back up. Additionally, Chapter 13 can help those debtors who have the income to pay off their debts but need a more structured way to do so. Chapter 13 bankruptcy may be a good alternative to Chapter 7 for those individuals and families that do not qualify for a Chapter 7 due to the means test or may have the property that is not exempt.
What is a Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is for those debtors that have a steady income and are able to pay back their debts. This is helpful when the debt is unmanageable due to interest, late fees, or other reasons. Chapter 13 allows the debtor to create a plan approved by the court to repay the debts. This can end late fees, interests, threats of lawsuits, and other collection tactics. This plan will last 3-5 years. At the end of the approved plan, some debts that were not completely paid off may be discharged. This discharge means the debtor does not have a legal obligation to pay back the debt.
Why File a Chapter 13 Bankruptcy?
One of the major reasons to file a Chapter 13 is to catch up on secured debt. This is debt that is secured to property as collateral such as a car loan or mortgage on a house. This is helpful when a debtor is behind on a mortgage and facing foreclosure. A Chapter 13 bankruptcy may be the best was to stop the foreclosure, pay off the arrearages, and stay in the home. The same advantages may help you pay off a vehicle that is behind by a few payments.
Also, some debtors may not qualify for a Chapter 7 bankruptcy but still need help. Most consumer debtors qualify for a Chapter 13 bankruptcy.