Probably the most common reason to file Chapter 13 bankruptcy is if you get behind in your secured debt and are at risk of losing your home or other secured property. Chapter 13 is an effective tool to stop foreclosures and repossessions. Another reason to file Chapter 13 bankruptcy is if you have non-exempt assets that could be sold in a Chapter 7 bankruptcy.
The main benefit of Chapter 13 bankruptcy is that you have time to catch up on your arrears. When the court approves your repayment plan, you will make one monthly payment to the court for three to five years. At the end of that period, all of your remaining qualifying debt will be eliminated.
Automatic Stay
As soon as you file your petition with the bankruptcy court, all collection attempts against you must stop. This is a benefit provided by the automatic stay. All phone calls, letters, legal actions, and wage garnishments must stop. If a creditor continues to try to collect on your debt, you can seek damages against them.
Some Debts Dischargeable in Chapter 13
Chapter 13 bankruptcy can eliminate some debts that are non-dischargeable in Chapter 7. These include debts incurred through fraud and claims for injuries purposely caused by you.
Some lenders consider a Chapter 13 bankruptcy to be less harmful to your credit rating than a Chapter 7 since you are willing to pay on your debt instead of eliminating them in a Chapter 7 bankruptcy case.
If you are worried you are about to lose your home or vehicle, contact a McAllen bankruptcy attorney to find out of Chapter 13 is a good option for you.