With three types of filings that individuals can do, coupled with what seems to be a complicated legal process, filing for bankruptcy has developed a reputation for being something that is expensive and reserved for CEOs or giant corporations. That couldn’t be any further from the truth as the U.S. Constitution gives every American the right to file for one.
Good legal representation for filing bankruptcy, however, is a necessity, and the experienced Brownsville bankruptcy lawyers at the Law Offices of Phillippe and Associates can assist you in determining which chapter is right for your situation.
If you have debts beyond what you can manage, Chapter 13 bankruptcy can help you restructure your debt so that you can pay it off over time. It is a cost-effective and protective filing that has many benefits that we will explore down below.
1. You Can Keep All Your Property
One good thing about Chapter 13 filing is that it allows you to keep your property. This differentiates Chapter 13 from Chapter 7. In Chapter 7 filings, all non-exempt property is sold by the bankruptcy trustee to raise funds for your debt repayment. In the Chapter 13 filing process, all nonexempt property can be “bought back” over the course of your repayment plan.
2. You May Qualify for Chapter 13 if You Didn’t Qualify for Chapter 7
Chapter 13 is often utilized by debtors with significant income. This is why it is sometimes referred to as the wage-earner’s bankruptcy. This can be contrasted with Chapter 7 bankruptcy which is utilized by those without enough income to pay their debts. If you fail the means test for Chapter 7, Chapter 13 may be the filing you need.
3. You Can Halt Repossession or Foreclosure
One of the most impactful protections provided by Chapter 13 is protection from foreclosures or repossessions. If you’re behind on mortgage payments and your lender is threatening foreclosure, filing Chapter 13 will initiate an automatic stay that stops the foreclosure process.
Similarly, if you’ve fallen behind on the payments on your car loan, filing for bankruptcy protection will halt any repossession efforts on the part of your lender. The filing also halts the efforts by either type of lender to collect payments.
4. You Can Pay Off Non-dischargeable Debt Over Time
While the bankruptcy process is powerful, it usually won’t discharge every debt you hold. You will still be required to pay off non-dischargeable debt. However, Chapter 13 offers debtors the option to restructure that debt in order to pay it off over time. This can help if the monthly payments you’re making are beyond your means.
5. You Can File for Chapter 13 After Filing to Chapter 7
The bankruptcy process isn’t perfect, and unforeseeable circumstances may arise. As such, some people may need to file more than once. While the bankruptcy process does allow debtors to file multiple times using the same chapter, there are various time requirements involved.
If you plan on filing for Chapter 7 a second time, you will first need to wait 8 years. However, if you filed Chapter 7 and now wish to file Chapter 13, you only need to wait 4 years.
6. Chapter 13 Can Reduce What You Owe on Collateral
If you own a car or home that has reduced in value since you purchased it, filing for Chapter 13 may allow you to reduce what you owe. You may be able to reduce your loan amount on a car or property (not your residence) to its actual value. Regarding your residence, you may be able to wipe out a junior loan if your home’s value doesn’t exceed the senior mortgages.
7. Chapter 13 Will Keep Your Utilities On
If you’re behind on your utility payments, the utility provider may threaten to shut off your utilities. However, a Chapter 13 bankruptcy filing will prevent the company from turning off your utilities or will require them to turn them back on if need be. You’ll have a chance to catch up on these payments as a part of your repayment plan.
8. Chapter 13 Can Halt Wage Garnishments, Bank Freezes, and Some Lawsuits
Creditors will often go to great lengths to get back what you owe. This may include filing a lawsuit against you or seeking to garnish your wages. Bank account freezes can be particularly difficult to face. If you’re facing any of these issues, a Chapter 13 bankruptcy filing can offer relief.
Your Brownsville Bankruptcy Attorneys: Phillippe and Associates
There are many financial situations in which a debtor might benefit from Chapter 13 bankruptcy protection. We’ve listed eight here, but there are arguably many more.
If you think bankruptcy could be an avenue that’s right for you, the Law Offices of Phillippe and Associates would be proud to help you through the process. Bankruptcy filings tend to be quite complex, so seeking legal assistance before your file is advised.
If you’re struggling with debt you can’t afford, contact the Law Offices of Phillippe and Associates to learn about your bankruptcy options.