Chapter 13 Bankruptcy is a repayment plan, overseen by the Court, to help you deal with your debts. A Chapter 13 Bankruptcy usually lasts between 3 and 5 years, and allows debtors to reorganize their debts.
Benefits of Chapter 13 Bankruptcy
Chapter 7 Bankruptcy is the more common type of bankruptcy filed by individual consumers. It is popular because it is quick (over in about 3 months) and usually cheaper overall. Chapter 13 bankruptcy, however, offers some major advantages and is a better tool for many situations. Here are some of the benefits of Chapter 13:
One Monthly Payment
If you are having trouble making monthly payments to many creditors, Chapter 13 can act almost like a consolidation of debts to make the payments easier. You make one monthly payment to cover all your debts.
If you are behind with your mortgage payments and want to keep your home, Chapter 13 gives you up to 5 years to catch up on your payments, and the mortgage company can't complain.
Protect non-exempt property
If you have too many assets and Chapter 7 would mean losing something, we can protect your assets in Chapter 13.
If you are behind with your car payments, Chapter 13 allows us to stop repossession and restructure your car loan at a lower interest rate. In some cases, you can pay for your car based on its value, not what you owe.
If you've filed a previous bankruptcy within the last 8 years, your Chapter 7 options may be limited. But you can file under Chapter 13 without having to wait.
Deal with Taxes
Although recent tax debts can't be eliminated in bankruptcy, Chapter 13 bankruptcy has options for paying the back taxes over 5 years, with no further interest or penalties...and Chapter 13 stops all IRS collection during the plan.
Although student loans can't be eliminated in bankruptcy, Chapter 13 bankruptcy allows you to pay these based on what you can afford, and hold off collection for up to 5 years.
If you have debt with a cosigner, Chapter 7 only takes care of your debt. Chapter 13 prevents collection from your cosigner for up to 5 years.
If you have any of the issues discussed here, you may want to consider Chapter 13. Talk to a Perez & Perez attorney today to learn more about your options.