Chapter 13 can be filed by individuals with a steady income and no more than $250,000 in unsecured debt and $750,000 in secured debt.
Here are several advantages of Chapter 13 bankruptcy:
The ability to reduce the amount owed on most secured obligations is a significant advantage of chapter 13 bankruptcy. If you default on a secured debt, you are required to return the collateral, which could be a vehicle, home, or furniture.
- Filing for Chapter 13 bankruptcy allows you to reduce the interest on a secured loan, which is an additional advantage. Chapter 13 requires you to repay the majority of secured debts at the prime rate plus 1 to 3 percent, dependent on the specifics of your case.
- Perhaps most significantly, chapter 13 allows individuals to avoid foreclosure on their residences. Individuals are able to halt the foreclosure process and make up missed mortgage payments over time.
- Chapter 13 bankruptcy allows individuals to reschedule and extend secured obligations over the duration of the chapter 13 plan. This may reduce the payments.
- Chapter 13 also protects third parties who are jointly liable with the debtor for """"consumer debts"""" This clause may safeguard co-signers.
- Chapter 13 will function as a consolidation loan in which the debtor will make scheduled payments to a court-appointed trustee, who will then distribute payments to creditors. There will be no direct contact between the individuals and the creditors.
- Chapter 13 may allow you to discharge your second mortgage. Depending on the value of your property and the amount you owe on your first mortgage, it may be possible in this instance to discharge your second mortgage.
- Individuals can retain their vehicle even if they are behind on payments. Chapter 13 allows you to retain your car even if you are significantly behind on payments.
Additionally, submitting it can prevent wage garnishments.
- Chapter 13 can be filed immediately after chapter 7 discharge to pay off remaining obligations.
The amount of your monthly plan payments is determined by the amount you are able to pay after paying for necessary living expenses. At the conclusion of 36 months, regardless of how much your creditors have collected, you will be discharged from all dischargeable unsecured debts.
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