The benefits of filing a chapter 13 bankruptcy are numerous. This article will walk you through some of its advantages, hopefully bringing you more clarity on what this sort of bankruptcy is like. Chapter 13 bankruptcy can be helpful even if you file for a chapter 7 bankruptcy beforehand. Not to mention, it is also quite flexible and convenient.
Remember, as you go through some of these benefits, you can tailor them as per your requirements. Read more to find out how.
Consolidation of Debts in One Economical Payment
A debt consolidation plan resembles a chapter 13 bankruptcy but with many critical exceptions. Firstly, you do not have to pay back debts as you normally would. Second, your creditors must surrender to accept your Chapter 13 bankruptcy plan while adhering to the bankruptcy code. Third, you must make only one payment per month to the bankruptcy trustee, who will then cater to and disperse creditor payments accordingly.
In most filing cases for a Chapter 13 bankruptcy as an individual, you must pay back only a minor percentage. This will be a small part of unsecured debt. Moreover, you no longer have to deal with further interest or penalties.
Chapter 13 Trustee
The trustee in your chapter 13 bankruptcy case is a vital person. Trustees look into your case, collect your chapter 13 plan payments, and allocate the funds to creditors, respectively. Note that most of the trustees and their staff are very friendly and empathic and have no means to embarrass you or be disrespectful. Trustees will guide through the way of your plan. They will vouch for assisting you in your Chapter 13 case to be successful while normally approving your plan.
Cost-Effective Up-Front Approach
Probably the biggest challenge when filing a bankruptcy case is accounting for the money for filing the case. Generally, the fees may be higher in Chapter 13 than in other plans. However, the upfront costs for getting your case filed in Chapter 13 are economical as opposed to filing a chapter 7 bankruptcy. There are also creative ways to establish a source of financing your chapter 13 cases’ initial filing payments while ensuring you have adequate money to survive.
Keep Your Home Regardless of Delay in Mortgage Payments or Being in Foreclosure
You are not at risk in terms of your assets, especially if you comply with the payment plan. Regardless of where you stand in your mortgage payments, you can still possess your home while filing a chapter 13 bankruptcy. This rule applies even if a foreclosure complaint has been filed, and your home is about to be sold. Additionally, you will not have to account for a lump-sum payment for the preceding mortgage payments that are due.
Cure Defaults on Mortgage for an Extended Period
You can cure your previous mortgage payments by accounting for small payments per month over a three to five-year period without paying for further interest or penalty.
Apart from these, many other benefits surround filing a chapter 13 bankruptcy case. This case, in particular, can be favorable in some circumstances. Contact your attorney for more information on how chapter 13 works and how it may be suitable for you.
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