Chapter 13 Bankruptcy
Are you considering a Chapter 13 Bankruptcy? In general, a Chapter 13 bankruptcy is a repayment plan. In Chapter 13, you will pay back at least a portion of your debt of over a period of 36 to 60 months.
Benefits of Chapter 13 Bankruptcy
Cram Down
A chapter 13 gives you the ability to reduce the amount of the lien on your vehicle (referred to as a cram down). For an example, if you own a car that is worth $8000.00 but owe $13,000, in a chapter 13, you may be allowed to reduce the secured amount you owe to $8000.00 and treat the remaining $5,000.00 as unsecured debt. Therefore, upon the successful completion of your bankruptcy, you will receive your title.
Super Discharge
A chapter 13 with its super discharge gives you the ability to discharge debts that would not be discharged in chapter 7, such as marital debts from a divorce decree and/or property settlement agreement (not to be confused with spousal/child support which are not dischargeable in either chapter 13 or chapter 7).
Stop Foreclosures
If you are facing foreclosure, a chapter 13 will stop your foreclosure and allow you to propose a plan that will bring your mortgage current. You will need to have sufficient income to resume making your monthly mortgage payments and make your proposed plan payments. It is important that you keep in mind that Virginia does not extend redemption rights to its homeowners. In other words, barring any issues with the foreclosure process, once your home is foreclosed your home is gone. Therefore, a chapter 13 bankruptcy will need to be file prior to the foreclosure in order to save your home.
Stop Repossessions
If you are facing a repossession, a chapter 13 will stop your creditor from repossessing your vehicle and allow you to propose a plan that will bring your vehicle loan current. You will need to have sufficient income to make your proposed plan payments.
Resolve IRS Debts
Do you owe the IRS? The IRS is not referred to as a Super Creditor for nothing. It has powers to collect debts owed it that other creditors simply do not. Do you have a home, car, other personal property, or a business? The IRS has the power to take them. With a Chapter 13, you are able to stop the interest and penalties and provide a plan that will repay the debt owed. Depending on how the tax debt is classified, you may be able to discharge some or all of the tax debt owed.
Affordability
Cannot afford to pay back all of your debt? You may not be required to. You may qualify to pay as little as 1% of your unsecured debts back. How much you will be required to pay back will depend on the facts and circumstances of your case. What will happen to the rest of my debts that are not paid in my Chapter 13? When the court grants your discharge, the remaining amount of your dischargeable debts that were not paid in your bankruptcy case will be eliminated.