Chapter 13 bankruptcy offers people in debt a way to see themselves clear of an impossible burden, without the problems that may be associated with filing for immediate debt discharge under Chapter 7.
When you file for Chapter 13, you will be working with your attorney to develop a realistic goal to incorporate all of your debt into one repayment plan, to be supervised by a trustee of the U.S. bankruptcy court. Typically, your payment plan can extend from three to five years, depending upon your income level. Upon successful completion of the plan, all remaining unpaid debt, will be discharged.
Like Chapter 7 bankruptcy, you get immediate protection from your creditors. But there are additional advantages. If your house is going into foreclosure, or your car into repossession, the Chapter 13 process puts an automatic stay on all collections, garnishments, liens and other recovery actions by your creditors. You can even strip off any second or third mortgage you added to your original mortgage and include it in your court-supervised plan. Chapter 7 won't allow you to do that. It is a great way to keep your house and car, while reducing your total monthly bill payment and saving thousands of dollars over the course of the original loan terms.
If high monthly student loan payments are causing your debt problems, Chapter 13 is an excellent option to help you temporarily reduce your monthly payment. You can include your student loans and other government-backed debt, including tax arrears, into your plan. In fact, repaying your tax arrears through Chapter 13 is better than a voluntary repayment plan. Penalties and interest on the arrears stops accruing. Interest on student loans continues to accrue during the length of the plan.
When you file for Chapter 13, your credit report won't take the hard hit that a Chapter 7 will cause. Creditors know that you are meeting your obligations and you have the cash flow to pay them back. Yes, your credit rating will take a hit. It is still bankruptcy, after all, but you can improve your rating quickly by following some simple steps. Many people secure a car loan within a year of filing.
Learn more about the advantages of Chapter 13 bankruptcy by talking to an experienced Florida bankruptcy lawyer at The Golden Law Group. Contact the firm to schedule a free consultation. Offices are conveniently located in Brandon and Bradenton, Florida. The firm represents clients in communities throughout Manatee County, Hillsborough County and Sarasota County, Florida.