Benefits of Filing for Chapter 13 Bankruptcy
Provided by HG.org
The life situations that lead to the necessity of filing Chapter 13 bankruptcy are dire and filled with monetary problems where the borrower is unable to pay back his or her debts. However, even in the event where a Chapter 13 is the only possible conclusion, there are benefits that may protect and help the applicant.
When a person needs to file for Chapter 13, he or she no longer has the means to pay for all his or her debts and still have enough disposable income to progress in life. While the individual does have some money left after paying at least a portion of lent income, it does not often lead to opportunities to improve or move forward. The wage earnerís plan, or Chapter 13, is available to those that need help in resolving these issues. Over the course of three to five years, the applicant works with an agent to restructure and find a solution to paying financial institutions back from loans and other debts.
The Benefits of Bankruptcy
Through filing for bankruptcy, the person may avoid foreclosure of a mortgaged building. This may prevent the home from sale and auction when the monthly payments are so behind the bank wants to seize the house. This may save the family and help all involved avoid possible ruin. Another benefit is restructuring payments to debt collectors. This will provide a way to pay that does not negatively impact the applicant. He or she will have a plan that makes sense and is beneficial. This may also keep other debt collectors from calling and attempting to garnish wages.
Besides staving off foreclosure and ending the mountain of bills, the person filing bankruptcy may postpone decisions of garnishment or wipe them away entirely. The negative impact on the credit score does usually last between seven and ten years, but the possibility of starting over and removing the bills may provide opportunities for the person to seek a better financial status or job. By filing bankruptcy, there is the potential to recovery from the financial burden. However, the individual must disclose all information to ensure the process progresses properly. Sometimes, this requires a legal professional versed in bankruptcy.
Differences in Chapter 13 and 7
Chapter 13 bankruptcy is for those that have disposable income or that have a business that must end due to debts. These may exist in loans or other borrowed monies. Some instances of closing a business or filing for Chapter 13 are bills and expenses that incur additional costs. Some issues arise through taxation and real estate. If investments fail, this could lead to a situation where a Chapter 13 is necessary. Chapter 7 is for an individual that does not have enough disposable income after all debts and expenses to pay for the rest or anything else. These individuals need a complete wipe or removal of most loans and other debt.
Supplementary Benefits of Chapter 13
While the primary benefits are often enough for some, the supplementary benefits could provide advantages over other processes. The procedure of Chapter 13 usually takes three to five years. However, it is possible to reschedule secured debts and then extend the payments across a longer period of time. This usually lowers the payments owed each month. This process may also protect co-signers for various loans or liens. Additionally, the applicant may provide payment for numerous debts to a trustee that allocates the monies to each debt collector. This ensure that no contact occurs between these lenders and the indebted individual.
The numerous protections that Chapter 13 provides is the primary reason those with disposable income available may seek to file bankruptcy in this manner. It is possible to retain a house in the middle of a mortgage, and the person may keep his or her vehicle. If he or she files for Chapter 7, many of these benefits do not exist. However, Chapter 7 is not available to everyone, and it is crucial that the appropriate process starts with the applicant. Any hidden data or financial statements could lead to bankruptcy violations that may incur penalties or criminal charges.
Legal Help in Chapter 13 Bankruptcy
Experts recommend someone to seek legal advice and assistance with a bankruptcy lawyer before starting the process. Some may need to follow a different procedure, and others could resolve the matter with a lawyer for specific concerns. Hiring legal representation may assist the person in finding the needed solution.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.