If you’re here, there’s no way around it: you’re considering a personal bankruptcy filing. And if you’re considering bankruptcy options, odds are your preference is for Chapter 7, a liquidation bankruptcy that qualifies you to discharge most or all of your unsecured debts. In the alternative, Chapter 13 bankruptcy means crafting a plan to repay a lighter load of debts, usually only the consumer's secured debts (like car payments and mortgages)
Given these facts, you may think the choice is clear and that Chapter 7 is the only way go. But before you file, it’s important to understand the valuable benefits that come from restructuring your debts via Chapter 13, including:
(1) Keeping Your Valuable Assets
One of the most important and impactful benefits of a Chapter 13 bankruptcy is a Chapter 13 debtors ability to hold on to both exempt and non-exempt assets during the three to five year period during which they repay their debts. This option can be incredibly important for debtors who have valuable assets that exceed Chapter 7 bankruptcy exemption limits. If you have inherited property, or some other "free and clear" property you want to keep, you can keep them throughout the bankruptcy period, and need not part with them as part of a liquidation bankruptcy. It also means that as soon as you file Chapter 13 bankruptcy you have the opportunity to avoid foreclosure by curing the default on your mortgage during the length of your repayment plan.
(2) Debt Discharges Not Found in Chapter 7
Also important in Chapter 13 bankruptcy is the debtors ability to get rid of, or significantly reduce, debts not normally dischargeable under Chapter 7 bankruptcy. As a result, in the case of a car loan, the payback on that loan would be significantly reduced if the value of the car itself is less than the loan.
(3) Avoiding Wage Garnishment
If your state allows wage garnishment (North Carolina does not) wage garnishment can be a real concern when seeking the safe havens of bankruptcy. Because of Chapter 13’s ability to restructure debt, it can be used to avoid wage garnishment for debts that are normally not dissolved by a Chapter 7 filing.
(4) Protect Your Co-Signers
Many bankruptcy debtors have, in their lives, sought the assistance of co-signers to secure valuable and needed loans. Chapter 13 bankruptcy protects these co-signers by preventing creditors from pursuing them for payments as long as your bankruptcy plan payments remain current.
(5) Reduced Interest Rates and Extended Payment Terms
While many people are skeptical of repaying debts under bankruptcy, Chapter 13 bankruptcy allows debtors the unique opportunity to reduce their debts, with the aforementioned benefits of keeping assets, avoiding wage garnishment and foreclosure, and protecting co-signors may be able to reduce the interest rates on certain loans, as well as extend the payment terms on some of their debts. This can be extremely beneficial if you have a high interest rate on your car payment. Many borrowers are able to restructure the car payment over a longer repayment term, at interest rates as low as 5%!
Are you a debtor who is considering the many safe havens of debt restructuring that a Chapter 13 bankruptcy filing can provide? If so, it’s best to consult with a qualified attorney before filing. A qualified bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of the case. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or make an appointment online right now at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.