Why would anyone want to consider bankruptcy as a viable option? If you are swimming in debt, it might be worth your consideration. Here are seven benefits for doing this, outlined by today's guest blogger Richard J Welt of McFerran Law.
Chapter 13 Bankruptcy is a court-approved repayment plan that helps debtors manage debt obligations in 3 to 5 years. Many debtors that feel overwhelmed with making monthly payments can have their obligations restructured so they are easier to pay. This is a great option that offers a variety of benefits with many debtors enjoying multiple advantages.
The following points provide insight on how Chapter 13 Bankruptcy can work for you:
1. Avoid Foreclosure. If you want to keep your home after falling behind on your mortgage, a Chapter 13 can give you up to 60 months to get caught up on missed payments and avoid foreclosure
2. Protect Non-Exempt Property. If you have non-exempt property (for example more than $125,000 equity in your home) you could lose that property in a Chapter 7. A Chapter 13 gives you the opportunity to keep that property.
3. Prevent Repossession of Your Vehicle and Catch Up on Loan Payments.If you have had your car more than 2 and ½ years, and you owe more than it’s worth, you can keep the car by paying the value over 60 months, and discharging the remainder of the loan. Even on newer cars, a Chapter 13 will allow you to pay the past due amounts over time
4. You Recently Filed Chapter 7 Bankruptcy. If you filed bankruptcy within the last 8 years you may still be eligible for protection through Chapter 13.
5. You Owe Back Taxes That Are Not Eligible for Discharge. If you have more recent tax obligations you may get them paid through an affordable repayment plan based on your income and expenses. The Internal Revenue Service (IRS) will stop collection attempts and accept monthly payments through your Chapter 13.
6. Need an Affordable Repayment Plan You Can Handle. If you have obligations such as student loan debt you can include them in your repayment plan. However, once your plan is complete the unpaid balance will not be discharged.
7. Protect Cosigners. Chapter 13, unlike Chapter 7, prevents creditors from pursuing your co-signers.
Only an experience bankruptcy attorney can tell you whether a Chapter 13 can help your particular circumstance.
Bankruptcy in the United States is a real legal treasure. It recognizes that as a society, we benefit from the renewed energy and hope that comes from a fresh start. Think about what you can make of a new financial life and give your attorney a call.