Chapter 13 bankruptcy can help you in a ton of ways if you are struggling financially. The first way that Chapter 13 can help you is to save your house. If you have fallen behind on your mortgage payments because of the loss of job or illness or just unexpected expenses, you can put what you are behind on your mortgage (the arrears) into your bankruptcy reorganization plan; that way you can pay the amount that you fell behind over 3 to 5 year period and resume making the regular mortgage payment. If you fall behind on your property taxes, you can pay those property taxes through Chapter 13 bankruptcy as well.
Reorganizing Your Financed Vehicle
If you fall behind on your financed car, you can save your car through Chapter 13 bankruptcy. You can put your entire financed car into a Chapter 13 bankruptcy; you can pay it over 3 to 5 years and most likely get a lower, more affordable interest rate. Also, you can do something called cram down if your car was purchased more than 2 ½ years ago. We all know that cars depreciate very quickly and will lose value. If your car was bought more than 2 ½ years ago, you can pay what the car is worth and not what you owe on the car through a Chapter 13 bankruptcy. The unsecured portion gets paid back at a percentage, often 10%-20%.
Reorganizing Taxes
A Chapter 13 bankruptcy can also help you pay taxes through the bankruptcy. You can pay credit card debt at a percentage. You can pay medical debt, anywhere from 10% to 100%. You can pay back personal loans.
Stopping Garnishments
Also, a Chapter 13 bankruptcy will allow you to stop a wage garnishment, a bank levy, a tax levy or most other collection activities. Once you file a Chapter 13 bankruptcy, something called and Automatic Stay goes into effect which means no one can sue you, no one can garnish your wages and no one can place a lien on your property. It is basically what the bankruptcy protection is all about and it is extremely powerful. Creditors who violate your rights under the bankruptcy code can be sanction by the Federal bankruptcy judges. You may be entitled to actual damages as well as punitive damages in some situations.
Benefit of Chapter 13
A Chapter 13 bankruptcy is a great tool for someone who is a wage earner and needs to catch up after filing behind on bills. May times, someone will be off of work for a period of time and is now able to get back on track. The problem is that the mortgage company, finance company and/or other creditors may not be willing to work with the individual in terms of a payment plan. The bankruptcy code mandates that creditors accept a repayment plan provided the plan satisfies the many requirements of the bankruptcy code. Since bankruptcy law is complex, you should not attempt to file a Chapter 13 bankruptcy without an attorney. There are simply too many areas of knowledge that you will be expected to know when filing for Chapter 13. Consider hiring an experienced, seasoned, bankruptcy attorney to assist you in your repayment plan. You will have enough work making all of your payments on time. You do not need the additional stress of dealing with the Trustee and the numerous creditors that may seek to modify your case.
