Chapter 13 bankruptcy filing is one of the most common types of bankruptcy that are applied for on a yearly basis. There are many benefits to Chapter 13 that other bankruptcy claims cannot provide. The biggest of these being that your assets do not have to be liquidated by the trustee put in charge of your case, as they do in Chapter 7. Chapter 13 also allows you to set up a payment plan so that you have the opportunity to keep your house without it being foreclosed on.
In other bankruptcy filings such as Chapter 7, your house will more than likely be foreclosed on simply because all of your assets need to be sold to repay the debt that you have accrued. What is nice about Chapter 13 is that creditors are restricted from contacting you through different means of communication once you have filed your bankruptcy papers in court. You then have the opportunity to set up a plan by which you will return all of the money that you owe in payments that can either be paid as normal or garnished from your wages. If the plan is approved, a court will appoint a trustee to be the financial go-between for you and creditors. Your direct payments go to him, and he forwards them on to the collection agencies, or the trustee becomes the one responsible for having your wages garnished at your place of employment.
The only time that the aforementioned "stay" can be lifted from your case is if you are not making the payments to the trustee or you simply can't have the correct amount garnished from your wages. Once the "stay" is removed from your case, lenders are then free to once again contact you by mail or telephone requesting that you pay them the money that they are owed. However, keeping up with your payments will keep the creditors away from you as long as you continue to show good faith by paying your trustee every month.
Another aspect of Chapter 13 that is nice for people struggling to make their monthly mortgage payment is that you get 3-5 years, as agreed to in the payment plan that is set up between you and the trustee, to make up any delinquent payments that have accrued on your account over time. This allows you to pay off the money that you previously did not pay before you filed for bankruptcy over an extended period. This allows for you to be less restricted financially every month.
Filing for Chapter 13 bankruptcy is really the best way to go, especially if you are an established homeowner that wants to do everything in their power to keep their current home. While it can seem like a daunting task at first, the payments that you are making to creditors are allowing you to get the fresh start that you want and need without the entire process greatly affecting your credit score.
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If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.