By filing Chapter 13 bankruptcy, you are making a very important decision. Simply put, your financial future may be on the line. Filing bankruptcy may seem scary. There are some unknowns to it, like what you might lose and how you can afford it. This article explains key benefits in filing Chapter 13.
It's Cheap
Simply put, filing Chapter 13 bankruptcy does more than protect you, it saves you money. It costs only $274 to file Chapter 13 with the courts. You can protect both home and car for that price. You should consider a lawyer, because if you pay a total of $1,500 to $2,000 for filing fees and lawyer help, then protect a $80,000 home from foreclosure and a $15,000 car from the repo-man, it's more than worth it.
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Automatic Stay Protection
The automatic stay is used in both Chapter 7 and Chapter 13 personal bankruptcy. This is a judge order stopping all collections against you for several months. You cannot be forced to leave your home, have your car taken, or have other assets taken. It only lasts a few months, but with Chapter 13 bankruptcy you can solve the problem with your debt repayment plan.
Delay Foreclosure or Stop Foreclosure
Perhaps the biggest reason for filing Chapter 13 bankruptcy is to completely stop a foreclosure. There is some fine print. You can't just stop a foreclosure in motion by filing bankruptcy. You must file before the home goes into foreclosure. If your home is currently in the foreclosure process, you may only be able to delay it a few months. Therefore, if you know you cannot pay your mortgage, filing Chapter 13 early can save your home. This can get complicated and requires a lawyer's expertise.
Add Your Car Debt to Debt Repayment Plan
Protecting your car may be the second most important part of filing a Chapter 13 bankruptcy. You can protect it from being taken as part of your debt repayment plan. You are still paying, but in installments you can afford.
Stop Utility Shut Off
While this may seem secondary, losing utilities may make it impossible to live in your home. An automatic stay stops it either for a certain amount of time or permanently if you can catch up with the bills in a few months.
Stop Creditor Harassment
Finally, who likes phone calls from credit companies who explain how much you owe, ask when you can pay, and are as rude as possible? By filing personal bankruptcy, creditors have no reason to contact you. By filing Chapter 13, they likely will get most if not all their money. If credit card and medical debt are your major problems instead of for your home and car, you may consider Chapter 7 bankruptcy to completely discharge this debt.
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