Chapter 13 Bankruptcy
Bills are piling up. Harassing creditors keep calling, demanding payments you cannot possibly make. You are at risk of losing your home.
What can you do? What are your options? One alternative is to file Chapter 13 bankruptcy. While bankruptcy may seem an extreme choice, this form of legal protection can provide space for you to regroup, reorganize, and save your assets.
Debt Relief Through a Chapter 13 Repayment Plan
Often called “wage earner” bankruptcy, Chapter 13 is for people who have a steady source of income but may be overwhelmed by debt payment obligations. Falling behind on mortgage payments is a common scenario in this circumstance. One of the most significant benefits of filing for Chapter 13 bankruptcy is that it halts foreclosure proceedings and offers you a chance to keep your home and other assets.
Chapter 13 bankruptcy allows you to repay a portion of your debt via a court-approved repayment plan. Following successful completion of the repayment plan, all remaining eligible debt is discharged.
To discover whether Chapter 13 bankruptcy is right for you, contact Bunch & Brock, Attorneys at Law, at 859-469-4821. For more than three decades, Bunch & Brock in Lexington, Kentucky, has provided assistance to individuals and families overcome by financial problems. Attorneys at our firm take the time to understand your situation and explain available options for relief.
Advantages of Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy protection, you put an immediate end to litigation, wage garnishment and other forms of harassment. You can take time to assess your situation and focus on restructuring debt. A Chapter 13 filing allows you the opportunity to repay your debts under better conditions and at lower interest rates.
Chapter 13 vs. Chapter 7
The focus of Chapter 7 bankruptcy is liquidation of assets, which means a court-appointed Trustee sells all of your nonexempt property to pay creditors. Chapter 7 is for individuals and business owners who do not have enough disposable income (and assets) to qualify for Chapter 13. After a Chapter 7 case is discharged, all qualifying debts are dismissed; if there is not enough to pay all creditors off, some receive nothing.
In contrast, Chapter 13 is a “reorganization” bankruptcy, which provides relief from creditor harassment while you determine a workable payment plan. The goal is to allow you to keep your property and let creditors collect at least a partial repayment. In some cases, you can reduce the balance on an upside-down home or car loan to the current market value of the property. It is also possible to discharge a second or third mortgage lien against your house.
Satisfying a Repayment Plan
In Chapter 13, you agree to a payment plan which includes reimbursing unsecured creditors with a sum determined to be equal to the value of the asset. Examples of unsecured creditors are companies that do not hold a deposit or lien on your house or title to your car. (This includes credit cards, loans used to purchase furniture, etc.)
The U.S. Bankruptcy Code gives you up to five years to repay your creditors under Chapter 13. The minimum amount you will have to repay depends on how much you earn, how much you owe and how much your unsecured creditors would have received if you had filed for Chapter 7.
Your repayment plan will be approved by the courts. A repayment plan can be created even if creditors disagree with it. Once you complete all necessary payments, the remainder of your outstanding eligible debts will be eliminated.
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Time Is of the Essence
When dealing with serious financial issues, time is of the essence, since postponing action may cost you some of your rights. If you wait too long to pursue Chapter 13 bankruptcy, you may lose this option. For example, one or more creditors may obtain a judgment against you that can force you into Chapter 7 and the resulting loss of your property.
Conferring with an experienced bankruptcy attorney is an important first step in the path toward financial stability. Bunch & Brock attorneys provide compassionate counsel and assistance to help you move on and move forward. We assess your individual situation and make sure you understand all options, then provide our recommendation for resolving the difficulty to your greatest protection and benefit.
To schedule a confidential appointment with a Bunch & Brock attorney, please call 859-353-6883 today or contact us online.