What is Chapter 13 Bankruptcy Good for?
Many debtors who are struggling with overwhelming debt start looking into options for a liquidation bankruptcy in which their non-exempt assets will be liquidated and they can receive a relatively quick discharge that comes with the ability to get a fresh start financially. However, given that debtors must pass the “means test” in order to prove that they are eligible for Chapter 7 bankruptcy, many debtors realize that they cannot file for a liquidation bankruptcy under U.S. bankruptcy law since they earn a steady paycheck or earn a decent salary. For those debtors, Chapter 13 may be the only bankruptcy option.
At first, you might have concerns about whether Chapter 13 bankruptcy is really what you are seeking, and you might be wondering, “What is Chapter 13 bankruptcy good for?” We want to emphasize that Chapter 13 bankruptcy is a powerful tool for debtors in Oak Park, Illinois and across the country, and it can help you to obtain the financial relief you are seeking. The following are just some of the ways in which Chapter 13 bankruptcy can be beneficial.
You can Stop a Foreclosure and Catch Up on Your Mortgage Payments
One of the best things about Chapter 13 bankruptcy is its ability to stop a home foreclosure and to allow the homeowner to get caught up on his or her mortgage payments. Both Chapter 13 and Chapter 7 bankruptcy come with the “automatic stay,” which attaches as soon as the debtor files for bankruptcy and prohibits creditors from continuing to take any action toward debt collection. When a debtor who is facing foreclosure files for bankruptcy, the automatic stay prevents the foreclosure from moving forward, along with any other court actions.
With a Chapter 7 bankruptcy, however, a debtor does not have the ability to get back on track with mortgage payments and to remain in their home. Differently, with Chapter 13 bankruptcy, the automatic stay stops the foreclosure process from progressing, and then the debtor has the ability to catch up on mortgage payments with the debt reorganization plan that is part of every Chapter 13 bankruptcy. Over a period of three to five years, the debtor will make payments as part of the repayment plan. Once the terms of the plan are complete, the debtor will be caught up with mortgage payments and will not have to worry about losing a home due to mortgage delinquency.
You can Get Caught Up on Debt Without Having Your Non-Exempt Assets Liquidated
Chapter 13 bankruptcy is also beneficial because it allows debtors to get caught up on debt without having to go through the process of having non-exempt assets liquidated (as in a Chapter 7 bankruptcy case). To be clear, in Chapter 13 bankruptcy, non-exempts assets are not liquidated. Instead, non-exempt assets are identified and valued, and those assets form the basis for the debtor’s reorganization and repayment plan.
Many debtors actually prefer Chapter 13 bankruptcy since it does not require a consumer to liquidate assets in order to catch up on significant debt.
Contact an Oak Park Bankruptcy Attorney
Chapter 13 bankruptcy is complex, and you should always have an experienced Oak Park bankruptcy lawyer on your side to assist with the process. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
New Study Addresses Racial Disparities and Consumer Bankruptcy
How to Avoid Unwanted Surprises in Your Bankruptcy Case
At first, you might have concerns about whether Chapter 13 bankruptcy is really what you are seeking, and you might be wondering, “What is Chapter 13 bankruptcy good for?” We want to emphasize that Chapter 13 bankruptcy is a powerful tool for debtors in Oak Park, Illinois and across the country, and it can help you to obtain the financial relief you are seeking. The following are just some of the ways in which Chapter 13 bankruptcy can be beneficial.
You can Stop a Foreclosure and Catch Up on Your Mortgage Payments
One of the best things about Chapter 13 bankruptcy is its ability to stop a home foreclosure and to allow the homeowner to get caught up on his or her mortgage payments. Both Chapter 13 and Chapter 7 bankruptcy come with the “automatic stay,” which attaches as soon as the debtor files for bankruptcy and prohibits creditors from continuing to take any action toward debt collection. When a debtor who is facing foreclosure files for bankruptcy, the automatic stay prevents the foreclosure from moving forward, along with any other court actions.
With a Chapter 7 bankruptcy, however, a debtor does not have the ability to get back on track with mortgage payments and to remain in their home. Differently, with Chapter 13 bankruptcy, the automatic stay stops the foreclosure process from progressing, and then the debtor has the ability to catch up on mortgage payments with the debt reorganization plan that is part of every Chapter 13 bankruptcy. Over a period of three to five years, the debtor will make payments as part of the repayment plan. Once the terms of the plan are complete, the debtor will be caught up with mortgage payments and will not have to worry about losing a home due to mortgage delinquency.
You can Get Caught Up on Debt Without Having Your Non-Exempt Assets Liquidated
Chapter 13 bankruptcy is also beneficial because it allows debtors to get caught up on debt without having to go through the process of having non-exempt assets liquidated (as in a Chapter 7 bankruptcy case). To be clear, in Chapter 13 bankruptcy, non-exempts assets are not liquidated. Instead, non-exempt assets are identified and valued, and those assets form the basis for the debtor’s reorganization and repayment plan.
Many debtors actually prefer Chapter 13 bankruptcy since it does not require a consumer to liquidate assets in order to catch up on significant debt.
Contact an Oak Park Bankruptcy Attorney
Chapter 13 bankruptcy is complex, and you should always have an experienced Oak Park bankruptcy lawyer on your side to assist with the process. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
New Study Addresses Racial Disparities and Consumer Bankruptcy
How to Avoid Unwanted Surprises in Your Bankruptcy Case
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