Chapter 13: Repaying Debts
Chapter 13 bankruptcy is a debt consolidation plan that allows you to restructure your debt. This is not a loan. Federal Law allows you to pay your creditors significantly less that you owe them in monthly installments over 3 to 5 years with no interest. The result is that your bills will be paid in full with a payment your budget can afford. Creditors must accept this plan and leave you alone.
Think of a Chapter 13 bankruptcy as a powerful tool which allows you to impose payment terms on creditors that are favorable to you, rather than having to live with harsh terms imposed by unsympathetic creditors.
A Chapter 13 bankruptcy can be an option for you provided:
Here are the most common advantages of a Chapter 13 Bankruptcy.
Stop Foreclosure
If your home is getting ready to be sold in a foreclosure sale, a Chapter 13 will stop the sale and allow you to stay in your home. You can then pay your mortgage arrears through the Chapter 13 plan spread out over a 36 to 60 month period of time.
Stop Auto Repossession
A Chapter 13 bankruptcy will stop the repo man dead in his tracks. You won’t have to worry about keeping your car because all your past due auto payments can be paid through the monthly Chapter 13 repayment plan over the next 3 to 5 years. And get this … sometimes, you can even spread the remaining auto payments over a 36 to 60 month period so that your car payments even go down!
Protect Co-signers
Perhaps a family member or friend co-signed a loan so you could get credit. When you failed to pay back the loan your co-signers feel the same pressure you do. In fact, they’re responsible for the debt if you fail to pay. But in Chapter 13 bankruptcy, your co-signers receive the same protection from the creditor that you do.
Lien-Stripping
This is a super-attractive benefit of a chapter 13 bankruptcy – so pay close attention. If you have a second or third mortgage on your home that is totally upside-down (not a penny of equity in it) it’s possible to walk away from that second or third mortgage. (Yes – you heard me right. Most second or third mortgages here in California are totally upside down, and you can treat that second mortgage on your residence like it was an unsecured credit card debt. Pretty neat … huhh!)
Debtor Keeps All Property
Chapter 13 allows the debtor to keep all property, including non-exempt property.
But Wait ... There’s More!
Here’s another neat trick you can only do with a California Chapter 13.
If you have a rental property (not your residence) that’s upside down, you can lower the balance of the loan to the current fair market value provided you can pay the complete balance off over the period of the Chapter 13 plan. Wow ... that’s like a forced sale at your price!
If you’re sick and tired of riding the California Debt Roller Coaster ... and you want real solutions NOW ... then get on your phone and call me at 951-286-1351. Or you can simply click on the Contact Me button at the top of this page and leave me a quick email message. I'll personally contact you back within 24 hours and we'll see how we can solve your debt problems.
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