Unexpected circumstances like accidents, medical problems, or loss of employment can wreak havoc on your finances. Consequently, you may be forced to default on your obligations like mortgage, car payments, or personal loan. If the matter is not sorted out fast, negative consequences such as frozen bank accounts, foreclosure, and lawsuits can ensue. While it may seem impossible to bounce back from such a financial crisis, filing for Chapter 13 bankruptcy can help you to take control of your financial situation.
That said, the process of filing for Chapter 13 bankruptcy is quite complicated. Thus, to maximize your chances of a favorable outcome, it’s best to enlist the services of a reputable attorney. At the law office of William W. Waldner, we are highly experienced in Chapter 13 bankruptcy. We will help you prepare a petition and draft a repayment plan.
Everything You Need to Know About Filing for Chapter 13
If you can't pay off your present debts, you can find relief by filing for Chapter 13. Here’s an overview of Chapter 13.
Filing for Chapter 13
Chapter 13 enables debtors to repay a considerable portion or all of their debts in 3 to 5 years under a plan ordered by the court. Once the court accepts your repayment plan, creditors cannot continue with their collection efforts. And when that period expires, any unsecured, unpaid debts are discharged.
Success Rate for Chapter 13
According to a study by ABI (the American Bankruptcy Institute), the chances of filing a successful Chapter 13 are less than 50 percent. The situation becomes worse when you try representing yourself—the success rate stands at 1.4 percent.
Advantages of Chapter 13
Filing for Chapter 13 bankruptcy has a number of advantages, including:
- You get to retain your property, and you're given time to settle your debts. For instance, in a situation where you're behind your mortgage payments and are facing imminent foreclosure, a repayment plan under Chapter 13 can help you catch up on those payments and save your property.
- Creditors are prohibited from having direct contact with you. They must go through a court-appointed trustee for the monthly payments you make.
- Chapter 13 also protects co-signers against consumer debt. Therefore, creditors cannot collect from the co-signer on the debt. Consumer debt is defined as anything that is bought for household, personal, or family purposes.
- Car loans and other secured debts, but not a primary residence mortgage, can be restructured and spread over the repayment plan in Chapter 13. This can help you make lower monthly payments.
Chapter 13 Vs. Chapter 7 Bankruptcy
To be eligible for Chapter 13, you must have a regular income. As such, this kind of bankruptcy benefits consumers with a high-income source and valuable assets. On the other hand, Chapter 7 bankruptcy is for those who cannot repay their debts at all.
In Chapter 13 bankruptcy, you retain all your assets and still get an extended repayment period of your outstanding debts. In Chapter 7, all your assets, excluding your car and home, are liquidated and handed over to a court-appointed trustee. The trustee then sells your assets and pays off your creditors using the proceeds. Whatever debt remains is discharged.
Top-Rated Debt Relief Attorney
A medical condition, divorce, business downturn, or job loss can make you consider bankruptcy as a financial solution. We can help you evaluate your legal and financial options if you have massive debts, then advise whether filing for Chapter 13 bankruptcy can be your way out of crushing debt. Contact the Law Office of William W. Waldner to start afresh with bankruptcy done right. Schedule your free consultation now: 914-559-9500.