The Benefits of Chapter 13 Bankruptcy

If you are currently living with a tremendous amount of debt and face daily creditor harassment and threat of repossession, wage garnishment, foreclosure or other legal action, bankruptcy could be the answer to your problems. Bankruptcy can provide you with relief from debt by reorganizing or discharging your debt so you can get a fresh financial start. Chapter 13 bankruptcy, also known as “wage earners bankruptcy,” involves restructuring and repayment of debts included in the bankruptcy. When you choose this type of bankruptcy, you will usually agree to a court supervised payment plan that lasts between 3-5 years. You will only be required to pay what you can actually afford. During this time you will pay a set monthly amount to a trustee who then distributes the funds to creditors. Once the term of bankruptcy has ended, all debts will be satisfied and you can begin the process of restoring your credit.

How Can Chapter 13 Bankruptcy Benefit Me?

Chapter 13 offers many benefits and advantages over other types of bankruptcy, such as Chapter 7, including:

• Avoiding Foreclosure – One of the most significant benefits Chapter 13 offers is the opportunity for home owners to avoid foreclosure. When you file for Chapter 13, you can stop any ongoing foreclosure proceedings. Chapter 13 will allow you to make up missed payments on mortgages as well as car loans.
• Better Credit Reports – Chapter 13 does appear on your credit report, but only for seven years. Other options, like Chapter 7, can stay on your credit report for ten years. Chapter 13 may also have less of an impact on your credit since you are paying back a portion of your debt.
• Reorganization – Chapter 13 allows debtors to reschedule secured debts and extend them over the life of the bankruptcy plan. This will usually lower the payments and discharge whatever is left after the plan has been fulfilled.
• Protection for Third Parties – Chapter 13 offers a special provision that helps protect third parties that may be liable for your debts, such as co-signers.
• No Direct Contact with Creditors – Because you will make payments to a Chapter 13 trustee who will then distribute the payments to creditors, you will not actually have to communicate with creditors in any way.

If you think that Chapter 13 bankruptcy could work for you, be sure to talk to a bankruptcy attorney like those at the Oswalt Law Group in Phoenix. The Oswalt Law Group has extensive experience preparing and filing bankruptcy on behalf of those in debt. We can help you determine which plan will work for your specific financial situation so you can become debt-free.