What Are Common Reasons to File Chapter 13 Bankruptcy?
Common reasons for filing chapter 13 bankruptcy could include but are not limited to the following types of situations and circumstances. The case of filing chapter 13 bankruptcy should be undertaken carefully because a big commitment comes with filing this type of case. As opposed to a ch. 7 bankruptcy which is started and finished in a matter of 3-5 months, a chapter 13 bankruptcy lasts for 3-5 years. Some people who initially seek a bankruptcy for the purpose of getting a fresh start can quickly learn that a chapter 13 doesn’t really provide a fresh start in this sense of the word because the bankruptcy itself lasts for 3-5 years and the fresh start doesn’t really start until after the bankruptcy is completed. Hence you should review your situation carefully with a financial professional, consider praying about it, and weigh your options in a way that is thoughtful and thorough before making your decision whether to file chapter 13 bankruptcy.
Reasons for Filing Chapter 13 Bankruptcy
- Catch up a past due mortgage that is facing imminent foreclosure
- Stop a repossession on an auto loan that has become delinquent
- Stop a lawsuit that has been filed against you for nonpayment of a debt
- Stretch debts out over a longer period of time
- Eliminate interest on high credit card balances
- Stop eviction from a home or apartment
- And more
Because each person has a unique set of circumstances, but elements may still be similar to many other bankruptcy filers, seeking the counsel of a qualified Cedar Hill bankruptcy lawyer can give you the insight into the situation. A bankruptcy law firm that has been around for many years will mean that the attorney has had time to help many other clients and get perspective that allows them to use their wisdom on your behalf. Similar to how you would want to choose a surgeon with the necessary experience in handling injuries, you want an attorney with the necessary level of experience that you can be assured that you will not be treated poorly.
Chapter 13 bankruptcy involves many reasons, and possibly the most important reason to consider chapter 13 bankruptcy involves saving a home from foreclosure through a repayment plan in bankruptcy. While the bankruptcy court is often difficult to work with, the trustee will accept your payment and disburse the funds to your secured creditors and sometimes to a pool of unsecured creditors as well if you have disposable income that allows for repayment of some unsecured debts.
How is a Chapter 13 Bankruptcy Payment Determined?
When filing chapter 13 bankruptcy, there are multiple elements involved in determining the amount of your trustee payment. Foremost in this are the requirements that certain debts be paid through the plan or paid outside of the plan. In the case of a debtor having IRS debt, the federal bankruptcy code requires that the debtor pay nondischargeable IRS debt through the chapter 13 repayment plan. If the plan does not support the ability to pay back the IRS, then the plan will be shot down eventually. On the other hand, it is important to consider that if you are filing bankruptcy for the purpose of catching up mortgage arrears, then you will need to make sure that your payment is sufficient to cover that secured mortgage arrearage over the duration of the bankruptcy.