Chapter 13 Bankruptcy
Attorney Brian Barta Discusses Advantages of Chapter 13 Bankruptcy
Chapter 13 bankruptcy is sometimes referred to as “wage earner” bankruptcy or reorganization. Under Chapter 13 bankruptcy, clients work with their attorney to create a repayment plan of their debt. Some clients repay only a small percentage of their debt, often as little as 5%, while some plans require a larger payment. The length or term of the plan can last anywhere from 12 to 60 months, (1 to 5 years). And while the thought of being in bankruptcy for 1 to 5 years at first can sound daunting, most plan terms are actually shorter than a new car loan. Plus, if the Chapter 13 is saving your home, stripping off a 2nd mortgage, and wiping out credit card debt and tax debt, it often actually feels like a very short and pain-free process. Many clients report that after the first few months, the bankruptcy plan payments feel like just another monthly bill, but one that ultimately provides huge benefits.
The great benefit of Chapter 13 bankruptcy is that it protects all of your property while offering flexibility in crafting solutions to major financial challenges. For example, in Chapter 13 you can:
Chapter 13 Bankruptcy May Help ``Wage Earners`` Keep Their Property
- Pay back past due mortgage arrears, thus catching up on your house payments over 3 to 5 years, ultimately saving your home.
- Pay off large personal income tax debts to the State and Federal government that would not be discharged in Chapter 7 bankruptcy, while wiping out penalties and interest
- Force automobile loan lenders to reduce the loan balances on “upside down” vehicle loans to the fair market value of the vehicle.
- Discharge all remaining unsecured debts, just like those listed in a Chapter 7 bankruptcy.
- Strip off 2nd mortgages from your residence. One of the most powerful tools in Chapter 13 is the ability to “strip off” or wipe out a 2nd mortgage or home equity line of credit.
