Chapter 13 bankruptcy is a vital tool for individuals that have debt that is unmanageable and who have assets that exceed Federal and/or state bankruptcy exemptions or do not qualify for a Chapter 7 bankruptcy. Chapter 13 bankruptcy also may be used to protect your home from foreclosure.
First, it is important to understand the homestead exemptions and other exemptions in your state. For example, if your home equity is under the homestead equity exemption for your state and you are able to retain your car in a bankruptcy, then a Chapter 7 bankruptcy may be a more attractive option.
Chapter 13 bankruptcy provides a chance for individuals to reorganize their secured debt aside from the mortgage for their principal residence. It allows them to lower their debt payments during the plan duration selected. A Chapter 13 bankruptcy also protects the debtor from creditor or debt collector harassment. It also acts as a vehicle for loan consolidation where the trustee acts as an intermediary between the debtor and his creditors to facilitate payment distribution to creditors.
The involvement of the Chapter 13 trustee to the process takes the pressure off the debtor. Creditors are no longer hounding the debtor for payments. Proper and professional management of the debt portfolio is achieved. Debtor protection is accomplished.
For a Chapter 13 debtor, debts are not automatically wiped out. It is rather a structure to allow orderly debt payment and preservation of assets. Please call us for a free consultation to see if Chapter 13 is right for you.