Filing for Chapter 13
Have you ever wished all of your bills could be combined into one easy monthly payment? It’s what all those credit counseling and debt settlement companies promise they’ll do for you. Unfortunately, it sometimes doesn’t work out as well as they had hoped it would. The payment terms end up being longer, some creditors declare that they refuse to negotiate with third parties and, unfortunately, sometimes as a result of late fees and penalties the “settlement” is often more than the amount you currently owe.
A Chapter 13 does all the things that a debt consolidation company promises, but sometimes fails to deliver on. It’s a court ordered repayment plan, with specified terms and a known outcome. Even better, this repayment plan can include things that a commercial debt consolidation program can’t. Mortgage arrearages, car payments, parking tickets and even back child support can all become part of one easy-to-manage monthly payment. There are even some additional benefits to filing Chapter 13 over Chapter 7.
Chapter 13 Benefits
Chapter 13 Stops Foreclosure – Homeownership is one of the biggest parts of the American dream. Sadly, it’s one of the parts that have been put into the biggest danger with our current economic state. As a result of foreclosure, millions of families face the loss of the home they worked so hard for. A Chapter 13 stops the foreclosure process dead in its tracks. It allows you to make the payments you’ve missed over time, as opposed to coming up with the full amount in one lump sum. No matter how far back you are, there is always the potential to save your home with a Chapter 13.
Chapter 13 Prevents Repossession – For the majority of Americans, a car is a necessity. The loss of your vehicle doesn’t just mean the loss of convenient transportation, it can cost you your ability to earn a living as well. When a Chapter 13 is filed, a creditor cannot repossess your vehicle, no matter how far behind you are on payments. The balance owed on the car is consolidated with your other debts. Furthermore, if your car meets certain qualifiers, a Chapter 13 could reduce your loan balance. In addition, the interest rate is often greatly reduced, potentially saving you thousands of dollars.
Chapter 13 Eliminates Unsecured Debts – Wait, doesn’t a Chapter 7 do this? If you’ve read our Chapter 7 information page, you know that it does. So, why would someone want to file a Chapter 13 when a Chapter 7 instantly wipes unsecured debts away? Well, as we stated before, not everyone qualifies for a Chapter 7. Those that don’t might still have Chapter 13 as an available Lifetime Debt Solution. Moreover, the majority of people that file Chapter 13’s only have to pay ten cents on the dollar for their unsecured debts; the balance is discharged. Think about that, if you have $30,000 in credit card debt and file a Chapter 13, you can save $27,000 in addition to the the future interest that would have accrued. The best part is that your creditors don’t have a say in your proposal. Whatever you can afford to pay is what the creditors have to accept.
Chapter 13 Reinstates Your Driving Privileges – Having a car is worthless if you’re not licensed to drive it. Even worse, if you get caught driving with a suspended license, you can get hit with thousands of dollars in additional fines or face longer penalties. While a Chapter 7 filing can take care of a suspension due to an uninsured accident, it doesn’t help if the suspension was due to parking tickets or other traffic violations. That’s where the Chapter 13 comes in. If your license has been suspended for tickets, a Chapter 13 filing will allow you to get it back IMMEDIATELY, while putting you on a payment plan to pay them off. It’s great peace of mind to know you’re legally driving and dealing with those fines that once seemed insurmountable.
Chapter 13 Wipes Out Second Mortgages For Pennies On The Dollar – When the housing bubble burst, people saw their hard earned equity rapidly disappear. Many homes are now so upside down that continued homeownership makes little financial sense. As a result, many people just walk away from their home altogether rather than choose to sink money into a bad investment. With a Chapter 13, certain homes qualify to have their second mortgages paid back for pennies on the dollar. To put those numbers into perspective, if you have a second mortgage of $75,000, you could pay it off for $7500 split over three to five years, interest free. Besides the incredible savings, it makes it that much easier to regain equity in your home.
Chapter 13 Bankruptcy Is Not For Everyone
Look, Chapter 13’s are a great solution, but they aren’t for everyone. Some people will benefit much more from filing a Chapter 7, while others have special circumstances that only a Chapter 13 bankruptcy can solve. If you think a Chapter 13 may be a good option for you, or you’re just looking for additional information, give us a call. We will always look out for your best interests and we have the experience to advise you as to which Lifetime Debt Solution is best.