Top 5 Reasons to file a Chapter 13 Bankruptcy

Family happy to be out of debt

1. You missed a few payments on your mortgage or car and you can’t come up with the lump sum payment to bring yourself current. In a Chapter 13 bankruptcy you will be able to spread out those payments over 36-60 months, and your creditors cannot foreclose on your home, repossess your vehicle, or continue to pile on late fees and penalties while you do so.

 

2. You owe more on your car than it is worth. If your car loan is 2.5 or more years old, your Chapter 13 plan can actually reduce the total of what you owe to the current value of the vehicle, saving you thousands of dollars.

 

3. You have a second or third mortgage on a house that is currently valued at less than the first mortgage. The bankruptcy judge has the power to completely discharge any additional mortgages or other junior liens if your house is “underwater” like this, saving you tens of thousands, even hundreds of thousands of dollars.

 

4. You need a loan modification in order to continue to afford your home. Unfortunately, banks can take months, even over a year, to decide if they want to give you a loan modification. But under new court procedures, you can have your Chapter 13 Plan confirmed while you await the bank’s decision, as long as you being making payments equal to 31% of your gross income, which is usually much less than the amount homeowners are currently paying.

 

5. Your credit card or other monthly debt payments are making it hard for you to pay your mortgage or car payments. Don’t put your home or car at risk trying to pay off credit cards or other unsecured loans. In a Chapter 13 bankruptcy you will most likely be able to wipe out most of your unsecured debts, like credit cards, so you can put your earnings toward what is most important, your home.

 

If any or all of the above are true for you, you will save a lot more through filing a Chapter 13 Bankruptcy than you will have to spend in attorney fees and trustee fees. Plus you will have the security of knowing that you are protected from foreclosure, repossession, and escalating fees and penalties while you get your finances back in order.

 

3 Responses to Top 5 Reasons to file a Chapter 13 Bankruptcy
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  2. […] my articles “Should I File a Chapter 13 Bankruptcy?” and “Top 5 Reasons to File a Chapter 13 Bankruptcy.” 0 Comments – Leave a comment! « Previous […]

  3. […] get bankruptcy relief under a Fresh Start (Chapter 7) Bankruptcy, or an Individual Repayment Plan (Chapter 13), in which the borrower is eligible pay back part of the debts, according to the borrower’s […]

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