Known as the ‘debt adjuster’s plan’ or ‘wage earners plan.’ chapter 13 bankruptcy is a popular bankruptcy choice for individuals. Chapter 13 Bankruptcy has two sets of benefits. One is the advantages of filing bankruptcy; the other is the bonuses of filing a chapter 13 bankruptcy.
The Advantages of a Chapter 13 bankruptcy
- Wipe unsecured debts like medical bills, credit cards, personal loans and payday loans
- Stops wage garnishments, lawsuits and bank levies
- Eliminates foreclosures and repossessions
- Gives you a way to rebuild credit from scratch
- Gives you some time to save money
- Stops harassment from creditors
What Makes Chapter 13 Bankruptcy Stand Out
- More discharged debts. Chapter 13 offers more discharged debts than other bankruptcy chapters. Examples are tax debt penalties, tax debt interest and marital settlement debt (not related to child or domestic support).
- Removes bankruptcy from credit reports faster. Chapter 7 and other bankruptcy filings remain on your credit report for close to 10 years. Chapter 13 remains on your credit report for seven.
- More time to repay creditors. A debt repayment plan lasts between three and five years. As long as you pay the set amount each month you’ll have enough time to get out of debt and bankruptcy.
- Protects assets you own from getting into the hands of creditors. By having a debt repayment plan you will have a set amount of money to pay monthly to creditors. This plan keeps valuables and property in your possession.
- No interruptions of day-to-day business operations. Filing bankruptcy ceases business operations. Your business may be part of property creditors want to own. The debt repayment plan makes sure your business continues to make money during bankruptcy and after discharge. It remains in your possession the entire time.
- Tax debt, tax liens, mortgage payments and car loans are easier to pay off thanks to low interest rates. Interest rates in a Chapter 13 plan are 0% for tax debts, and it’s just as low for tax liens. Mortgage payments are also at 0% interest. Penalties and accumulated interest is wiped clean. Some old tax debts are erased completely. Chapter 13 steps in to stop foreclosure and saves the default. Chapter 13 steps in to stop reaffirmation agreements banks want you to sign for car loans. The debt repayment plan makes car loans interest rates at 5% interest, and you can keep your car while paying it off.
- Second mortgages and home loans are voided. This only works if the home is less than the current balance on the loan before filing for chapter 13. This is great for anyone who wants to keep their homes.
Contact us for more information on chapter 13 bankruptcies and how we can help you climb out of debt. Or, learn more about our other practice areas.