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Bankruptcy May Be Your Option

Three major advantages of Chapter 13 bankruptcies

In a previous post, we provided an overview for how Chapter 13 bankruptcies operate. In sum, they are a mechanism to consolidate and reorganize debt by putting into place a payment plan over several years. This post will provide further insight into three of the major advantages of Chapter 13 bankruptcies.

First, Chapter 13 bankruptcies can help you save your house from foreclosure. If you have missed payments on your mortgage and the lender has initiated foreclosure proceedings, a Chapter 13 can aid you in this situation. 

In the bankruptcy plan, there is a mechanism by which you are able to catch up on your past-due balance and continue to pay your mortgage directly through the plan. Obviously, this can be a great alternative to losing your house and having to find a new home.

Second, Chapter 13 bankruptcies can create new payment plans for secured debts. A secured debt is any debt that was given in return for an interest in a particular item, like a vehicle. For instance, under Chapter 13 you are able to keep the vehicle you are still making payments on and continue to maintain your payments through the Chapter 13 plan.

Third, Chapter 13 bankruptcies can provide a buffer between you and your creditors. Rather than having to deal with them directly, you make payments to a court-appointed trustee. The trustee then distributes the appropriate funds to each creditor. You will no longer have to worry about debt collectors frequently contacting you in order to collect payments. 

It’s worth noting that Chapter 13 is not right for every person in every situation; there are other debt relief options and types of bankruptcy available. However, understanding more about how Chapter 13 works can help you identify potential solutions. If you are dealing with a difficult financial situation and need debt relief, we recommend reviewing our Chapter 13 bankruptcy page. Further, each person’s situation is unique, and should be evaluated by an experienced bankruptcy attorney.

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