How does Chapter 13 bankruptcy work?
Stop foreclosure with a Chapter 13 bankruptcy petition. You can also stop repossession of your cars, stop garnishment of your wages, and consolidate your medical debts and any other debts you have into one repayment “plan.” Chapter 13 bankruptcy, or reorganization bankruptcy, allows the filer to restructure his or her debt into a three to five-year repayment plan. With this option, the filer could end up discharging some debts while obtaining more time to pay off others. A debtor may not qualify under the means test required to file for Chapter 7 bankruptcy, but they will likely be eligible to file under Chapter 13.
Additionally, Chapter 13 offers many benefits to a debtor, such as stripping mortgage liens and doing “cramdowns” on car loans. A cramdown allows you to force the lender to accept a cramdown of the loan, wherein you ONLY owe the retail value of the vehicle. This saves our clients thousands of dollars! Remember, this only works where the car loan is more than two and a half years old. Another reason someone may choose to file Chapter 13 instead of Chapter 7 is to pay back their tax debt over a 3-5 year period. This can be really helpful for people when the IRS is about to garnish wages, lien--up bank accounts or seize assets.
What are the major benefits of Chapter 13 Bankruptcy?
How do I know if Chapter 13 bankruptcy is right for me?
Although Chapter 13 Bankruptcy is a very powerful tool, it is not always the best choice for everyone. Speak with a Los Angeles bankruptcy attorney today to determine if filing for Chapter 13 Bankruptcy is the right option for you.