Chapter 13 Bankruptcy Can Pay Your Creditors.
It sounds good eliminating most of your debt in one go, but the discharge you get in chapter 7 bankruptcy only applies to your unsecured creditors. That's the right decision in a lot of situations, but for others, a chapter 13 will work out better
Chapter 13 Bankruptcy Can Pay Your Mortgage Arrearage and Stop Foreclosure.
A chapter 13 is a payment plan where you pay a fixed amount to a bankruptcy trustee over a period of anywhere from 3 to 5 years. That payment is used to pay certain creditors.
One of the main benefits of doing this is that if you have mortgage arrears, you can pay them back through this plan. This is great for people who are behind on their home and facing foreclosure. As soon as your bankruptcy case is filed, you are protected by the US bankruptcy court and your mortgage lender is can no longer foreclose on your home. The arrerage that is owed is put into the chapter 13 bankruptcy plan , and is paid off by your monthly payments to the bankruptcy trustee. This is an excellent option.
Chapter 13 Bankruptcy Can Pay Your Car Arrearage and Stop Repossession.
If you are behind on car payments and are facing a repossession, a chapter can not only stop the repossession from happening, but it can also pay whatever you are behind back to the creditor. Most chapter 13 plans pay the car off entirely in the bankruptcy case, so the person who files the bakruptcy case usually comes out of the plan with no car payment.
Vehicles Can Be "Crammed Down" in Chapter 13 Bankruptcy.
What is a cram down? It's paying the creditor back how much the car is worth rather than how much is owed on the note. Most of us owe more on our cars than they are worth. If you have owned a car for a period of time you may be able to "cram down" your vehicle in a chapter 13 bankruptcy plan and pay back how much the car is worth rather than how much is owed for it.
Chapter 13 Can Pay Your Tax Debt.
If you're getting hounded by the IRS or the state because of a tax bill, you can use a chapter 13 to immediately stop collection and pay your tax bill off. Some taxes are dischargable, however some are not. The amounts not eligible for discharge can be paid off in your chapter 13 bankruptcy.
Chapter 13 and Student Loan Debt.
Student loans are virtually impossible to discharge in bankruptcy. If most of your debt is student loans, typically a chapter 7 is not going to help you at all, because the discharge doesn't apply to your student loans. Chapter 13 is an excellent way to stop a creditor from collecting, even garnishing, and pay back some if not all of your student loans.
Chapter 13 Will Stop Garnishment.
Unless you have filed multiple cases within a short period of time, when you file a bankruptcy case you are protected by the US Bankruptcy Court from creditors. This is powerful protection known as the "Automatic Stay" that keeps creditors from garnishing you while you are in bankruptcy.
Chapter 13 is an excellent way to get a fresh start, pay off creditors and consolidate certain creditors. Please call a Phoenix Bankruptcy Attorney at our office for a free consultation. 480-355-1377