Hopefully you have read our previous blog titled “How Chapter 7 Benefits You.” This blog will discuss the many advantages of filing a Chapter 13 case. Although a Chapter 13 case can appear to be more complicated, it actually offers the debtor more flexibility in dealing with his or her debts.
Below are a few examples of the benefits of filing a Chapter 13 case:
- Debt consolidation. A Chapter 13 is often referred to as a “reorganization bankruptcy” because it allows the debtor to create a plan for dealing with all of his or her debt. Your Chapter 13 plan outlines how you will repay your creditors and it consolidates all of your debts into one manageable monthly payment made to the trustee who distributes payments to each creditor according to the terms of the plan.
- Unsecured debts. Your Chapter 13 plan must pay a percentage of your unsecured debts, which includes your credit card debt and medical bills. In many cases, unsecured creditors are paid pennies on the dollar owed.
- Secured debts. If you are delinquent on certain secured loans, such as your mortgage loan or vehicle loan, you can get caught-up on your past due payments through your Chapter 13 plan. Since your plan lasts for three to five years, you can make small monthly payments in your plan to be pay your past due balances.
- Lien-stripping. If you have more than one mortgage on your home, you may be able to eliminate your inferior mortgage(s) depending on the value of your home and the amount owed on your first mortgage. This process is often referred to as “lien-stripping” and it involves treating the inferior mortgages as unsecured debts in your Chapter 13 plan.
If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get-out-of-debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!