Financial hardships can be distressing, but there is help available. Filing for chapter 13 bankruptcy can bring relief from debt collection efforts and harassments from creditor phone calls. A chapter 13 form of bankruptcy, also known as a wage earner’s place, allows persons with regular income to develop a plan to pay back all or part of their debts. Unlike chapter 7 bankruptcy, where all the borrower’s assets are liquidated to repay creditors, a chapter 13 plan allows debtors to create a repayment plan to make installments to creditors over 3 to 5 years. Here are the top three benefits offered by chapter 13 plan.
Consolidation of All Debts
Filing for chapter 13 bankruptcy allows the debtor to consolidate all their debts, and make one monthly payment, instead of paying many creditors every month. Even though there are other debt consolidation plans, a chapter 13 plan is backed by the Federal Bankruptcy Court, which offers protection from creditor harassments.
Filing a chapter 13 bankruptcy can help the borrower to avoid foreclosures on their properties, at least temporary while working out the details of debt consolidations and payment arrangements. The debtor’s mortgage can also become part of the monthly payment, which allows them to stop foreclosures altogether. As long as the debtor makes all mortgage payments in a timely manner after filing for bankruptcy and make efforts to catch up delinquent payments, they can retain their property.
Avoid Accruing Late Fees
According to expert law, once a person files a chapter 13, the late fees on their debts stops to accrue. Additionally, when the court consolidates all debts, it figures the amount owed less all the previously applied late fees. Generally, all those fees are removed from the debts. Most of the chapter 13 repayments are set between 2 to 5 years. When the set time frame is up, the collection stops and the remaining debts from the day the debtor filed for bankruptcy are erased.
These are just some of the key benefits of filing for chapter 13 bankruptcy. For additional details about a chapter 13 plan, and the duties of a knowledgeable bankruptcy attorney, please go to Law-margulies.com.
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