Should You File a
Chapter 13 Bankruptcy?
Chapter 13 bankruptcy can be an excellent legal remedy if you are struggling to keep up with your debt, and you want to find a way to keep your valuable assets.
Should You File a Chapter 13 Bankruptcy?
Should You File Chapter 13 Bankruptcy? If you have this question, then you are in the right place. Many homeowners behind on their mortgage payments use Chapter 13 bankruptcy. Generally, it is used as a legal tool to restructure their home mortgage payments and save their home from foreclosure.
If you are facing foreclosure, Chapter 13 may allow you to restructure your payments and get caught up on your mortgage over time. Chapter 13 can also help you restructure your car loan and save your car from repossession. It may also allow you to keep certain assets. Otherwise liquidated in Chapter 7 bankruptcy by paying non-exempt value of those assets over time through your Chapter 13 plan. It may also be the only option available to you if you do not qualify for a Chapter 7 bankruptcy.
A misperception
A common misperception about Chapter 13 bankruptcy is that many people believe that it requires full repayment of your debts. However, this simply is not true. In Chapter 13 bankruptcy, you are only required to pay your unsecured creditors the higher of 1) the amount they would have received through a Chapter 7 liquidation of your non-exempt assets and 2) the amount you can afford to pay, as determined by the “disposable income” calculations of the Means test. You receive an Order of Discharge from the bankruptcy court after your plan payments are completed. This discharges any and all remaining balances of your dischargeable debt. Similarly, this is essentially Order of Discharge that a Chapter 7 filer would receive after trustee liquidated all non-exempt assets.
To sum up, at the very least, Chapter 13 will initiate the automatic stay, stopping all lawsuits, garnishments, foreclosure suits and collection calls, and provide an efficient way to consolidate your debt through one monthly payment to the Chapter 13 trustee pursuant to your Chapter 13 plan.
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