Chapter 13 May be a Good Option

20 - Sep - 2013
Credit Card Debt

So, let’s say you’ve found an attorney that you’re comfortable with.  They say you make too much money to qualify for Chapter 7, and they’ve recommended filing Chapter 13.  Below we summarize what Chapter 13 is, and what it could potentially offer, if you qualify.

Chapter 13 Bankruptcy in brief

Commonly called “reorganization bankruptcy,” Chapter 13 has several liquidation advantages over chapter 7.  For some, the most significant difference is that it can save homes from foreclosure.  Chapter 13 allows you to keep all of your property in exchange for re-payment.  The amount and duration of the repayment plan will depend upon your income, expenses and types of debt.  Chapter 13 has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may also protect co-signers.

  •  Save your home from foreclosure

This is probably the most significant benefit that chapter13 can offer, saving your home from foreclosure.  By filing under this chapter, you can stop foreclosure proceedings and also cure delinquent mortgage payments over time.  In addition, there are certain circumstances that may allow you use Chapter 13 to reorganize your current loan to eliminate a second mortgage. This may take more time to administer; however, in the end, you could save a lot of money!

  • Improve Credit Record

There are two credit systems.  The first is the “consumer credit system” that calculates your FICO score, reflecting your credit worthiness.  The second credit system is for the banks only.  Because Chapter 13 includes the repayment of debt, lenders, especially banks, tend to look more favorably upon it than Chapter 7.  After filing, you’ll have a reduced debt ratio.  As you begin to repay your debts credit scores naturally increase.

The attorneys at Debt Advisors Law Offices encourage consumers to do a little research, take advantage of the free consultation, and weigh all your options.  Once you’ve found a reputable bankruptcy firm that you’re comfortable with, your battle is half over!

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